Courting The Bull Market

Nathan Chapman takes his investment firm public

As one of the largest blackowned investment and brokerage firms, Baltimorebased the Chapman Co. has had many notable firsts. But in February the firm broke historic ground, becoming the first and only publicly traded African American brokerage firm. Its new ticker symbol, CMAN, is now firmly entrenched on the Nasdaq small-cap market.

Nathan A. Chapman Jr., the 40-year-old founder and president of the securities firm, retained a 62% ownership stake in the company following the public offering in February. The offering raised $8 million as Chapman sold over a million shares at $8 per share. The stock, 5% of which is targeted to company employees, recently traded at $9.75; Chapman’s personal stake in the company jumped to $18 million overnight.

“The time was right for us to go public because we’re fully developing our domestic emerging market strategy,” says Chapman. “We want to utilize this capital to help take other minority firms public. The capital also gives us the capacity to do larger public and government-financed transactions.”

Chapman’s emerging market strategy targets businesses run by African Americans, Latinos, Asians and women as holdings in its funds. These concerns will also be the primary target of Chapman’s efforts to win their investment banking business.

Though the Chapman Co. may have been the first black-owned Wall Street firm to go public, it likely won’t be the last. As a number of African American brokerage firms and investment banks develop new markets and broaden their businesses into capital investment areas like corporate finance and initial public offerings (IPOs), more firms are likely to tap the capital markets for money to further expand their firms.

Though the stock has been thinly traded at the outset, Chapman hopes that as analysts begin to cover the company, the stock price will begin a steady trek upward.

For the 10 months ending October 31, Chapman reported revenues of $2.5 million, a 31% increase from the same period a year ago. Net income for the first 10 months of 1997 was $314,000, compared to $95,000 over the same period the previous year.

One thing is certain–the Chapman Co. has an even tougher mandate to keep growing the business now that its stock price is largely dependent on the company’s performance. “The true test will be how well the stockperforms. That’s what Wall Street wants to see,” says Owen May, chairman of the May, Davis Group, a black-owned investment bank and brokerage house based in Baltimore.
The Chapman Co. was the self-underwriter for the offering, with participation from other majority- and minorityowned firms including Smith Barney Asset Management and Bostonbased Wellington Capital Management.

Chapman says now that he’s taken the firm public, he’s exploring merging with or acquiring other broker dealers. The company plans on doing eight to 10 IPOs this year. In March, Chapman launched its Domestic Emerging Market Equity Fund, an open-ended fund that will be marketed in a load and no-load version and included as an option in deferred compensation plans.

“I believe the Chapman Co. is going to serve as an example to other

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