of $313 million to invest in smaller middle-market companies in the consumer products, food, manufacturing, and healthcare industries.
Managing Director Willie Woods says the climate for private equity firms offers both hope and challenges. The environment is promising because investors are out in droves looking for investment opportunities with newer funds and emerging managers. But he points out that mega buyout funds run by the likes of Kohlberg, Kravis Roberts Co. and the Blackstone Groupwhich recently filed for its own IPOare real hurdles. Theyre sucking up a lot of the capital, and its difficult to get airtime if youre small.
Indeed, that is the greatest challenge facing black-owned private equity firms: to increase the capital that institutions, including pension funds, invest in them, says Robert L. Greene, president of the National Association of Investment Companies. He says minority-owned firms manage less than 2%or about $8 billionof the private equity capital in the United States. Black private equity firms continue to do a great job with the resources they have, Greene observes. However, until significantly more capital is made available for them to invest, it will be difficult for them to compete for the larger deals.
BEs first report on black financial institutions noted the rapid growth of banks, savings and loan associations, and insurance companies controlled by African Americans. In 1973, 37 banks, 44 thrifts, and 42 insurers were the primary source of loans, mortgages, and life insurance for blacks. The past 35 years have brought sweeping structural and regulatory changes, leading to the consolidation of institutions and creating one-stop financial supermarkets. As a result, black banks now compete against majority-owned financial monoliths, thrift institutions have disappeared, and black insurers have been reduced to four major players: North Carolina Mutual Life Insurance Co., Golden State Mutual Life, Atlanta Life Insurance Co., and Williams-Progressive Life Accident Insurance Co.
[Financial Services Eligibility]
These are commercial banks or savings and loans that are classified by the Federal Reserve as black institutions and have been fully operational for the previous calendar year. An institutions financial status is measured in terms of total assets, capital, deposits, and loans, including mortgage-backed securities for the calendar year. In compiling our list of the leading 25 institutions, we received surveys from black-owned institutions and consulted the Federal Reserve, state banking commissions, and industry associations.
B.E. Investment Banks
An investment bank must be at least 51% black-owned and have been fully operational for the previous calendar year. The 10 investment banks on our list engage in activities such as underwriting, initial public offerings (IPOs), mergers and acquisitions (MA), retail brokerage, institutional research and sales, and financial advisory services. A firms financial status is measured in terms of total dollar amount of issues derived from the underwriting of municipal and corporate bonds and equities for the calendar year. In addition to receiving surveys from these companies, we rank the firms based on information provided by Thomson Financial Securities data, which tracks investment bank transactions, reviews SEC filings, and serves as the industry standard for measuring