A Rising Tide

Explosive growth in the securities business gives African American investment banks a boost

Co. in Arkansas. Jackson retains the chairman’s post and is now responsible for business development and strategic growth, while McDaniel oversees the firm’s day-to-day operations.

One of McDaniel’s early goals was to make Jackson Securities a national firm instead of a primarily Southeast entity. Already, the new CEO has hit the ground running.

In the year since McDaniel’s arrival, Jackson Securities added a corporate finance division; opened offices in Houston, San Francisco, San Diego, Los Angeles and Chicago; and beefed up its staff from 12 to 26. “Our revenue growth in 2000 will be consistent with this growth in personnel,” McDaniel says, adding the firm is already on track to meet its internal targets.

Jackson Securities scored two major coups in 1999. Along with J.P. Morgan, the firm co-senior-managed a $1 billion bond deal for the city of Atlanta General Fund. Additionally, it handled a $131.8 million leveraged lease deal for tire maker Michelin North America, whose company was in need of specialized advisory services to determine the most cost-efficient way to acquire tire-making equipment.

“We analyzed the economics of them buying versus leasing,” says McDaniel. “We also examined how any payments would affect Michelin from a tax standpoint.”

Like McDaniel and Jackson, officials at Loop Capital Markets (No. 7 on the B.E. Investment bank list) have also been on a hiring binge, trying to staff a slew of new branches. In March, Loop opened its sixth office in Sarasota, Florida, complementing its Chicago headquarters and branches in New York City, Detroit, Oakland, California and Houston.

After nearly three years in business, the firm has established its presence in the capital markets. As a major public finance dealer in the state of Illinois; Loop serves as the stock buyback agent for 12 Fortune 500 companies and has 15 initial public offerings under its belt since launching its equity underwriting business last May.

Chairman and CEO James Reynolds Jr. says 80% of the businesses his company has taken public are hi-tech firms. As a result, Loop’s internal research focuses on the telecommunications and wireless arenas. Reynolds is also expanding Loop’s research effort by bringing on an Internet analyst.

“Chicago is positioning itself to be the Silicon Valley of the Midwest,” Reynolds proclaims, pointing to the rapidly growing number of hi-tech startups in the region. When these companies want to raise money, they often turn to New York-based investment banks. “We want to step in and handle that business,” Reynolds says.

Moving forward, technology and an increasing reliance on the Internet are expected to play huge roles in the lives of African American investment bankers. But just because the hi-tech revolution presents new opportunities, that doesn’t mean traditional areas such as municipal underwriting will be disappearing from the landscape.

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