Now That The Smoke Has Cleared…

The year-long repositioning of Black investment banks has produced some unexpected winners andlosers. Here's how the new landscape shapes up.

while some black-owned firms may continue to go it alone, struggling to hang on to their share of a shrinking pie, the recent changes have helped other firms shed some light on fast-growth areas such as asset management. Industry observers note that the continuing growth of the black middle class will mean increased opportunities for African American firms with the savvy to serve them and their increasing wealth. In areas such as pension investments and college and retirement funding, asset management promises long-term growth. The prospect of tapping into these new markets was enough to convince Atlanta-based Ward Bradford & Co. and Clementon, New Jersey-based Sturdivant & CO. to abandon the investment banking business for asset management opportunities–hence they no longer appear on the BE INVESTMENT COMPANIES list.

Charles A. Bell, CEO of Charles A. Bell Securities Corp. (No. 12 on the BE INVESTMENT COMPANIES list), says some firms are sticking it out in the municipal bond arena, but are slowly making the transition to other areas of asset management. “We have, to a degree, tried to diversify, but that’s going to take time,” says Bell, who opened Charles A. Bell Asset Management Corp. about 18 months ago. But he adds that entering new markets with out a track record can be rough without “the relationships with corporate people that are necessary to become a major player.”

For black investment banks, making the transition will be hard, but not impossible. “The muni-bond market doesn’t signal the death of blacks in finance, by any means,” says Ernest Green, managing director of Lehman Brothers in Washington D.C.. and chairman-elect of the National Association of Securities Professionals. “It’s just one index.”

To be sure, blacks are making inroads in other segments of finance. Indeed, thriving-young firms such as Utendahl Capital Partners (No. 1 on the BE INVESTMENT COMPANIES list), the Williams Capital Group (No. 11 on the BE INVESTMENT COMPANIES list)and Blaylock & Partners (No. 6 on the BE INVESTMENT COMPANIES list) have been building their businesses on taxable deals–including equity trading and fixed incomes.

“There are going to be downturns in every sector from time to time,” says Christopher Williams, chief executive of the Williams Capital. “As smaller firms, we can’t be all things to all people. The key is to find areas of growth, pick a niche and offer the best service.” Williams is betting that his strategy of offering institutional investors targeted research, sales and trading services in the equity- and fixed-income markets will give him an edge over other firms.

REBOUNDING FROM THE MUNI BUST
The immediate future does not look bright for the muni-bond industry, especially with interest rates slowly beginning to creep higher. In addition, the hotbed of competition for the country’s fast-windling number of issues mikes it questionable that many minority firms will be able to compete effectively against larger firms for business if they continue to operate as they have in the past.

Part of what makes the muni-bond crash so alarming is the swift and furious blow it dealt to

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