Observers will be watching this year to see if WWT, last year’s Company of the Year, will eventually overtake the automotive conglomerate.
More black-owned businesses are strengthening their positions by entering the financial markets. For instance, Radio One Inc. (No. 29 on the BE Industrial/Service 100 list with $93.3 million in sales) went public in 1999. As a result, the market cap of the radio broadcaster grew to $2 billion. Moreover, it obtained the capital to acquire 21 stations for $1.4 billion, expanding its portfolio of such properties to 48. (See “High Frequency Profits,” this issue.)
Because of such milestones, it is only fitting that our rankings have been expanded to include the be asset managers list, the leading black-owned firms that manage the funds of institutional and retail investors. With a raging, albeit volatile, bull market, money managers are profiting today like at no other time in history. In future years, more firms will make inroads as African Americans invest greater dollar amounts in the capital markets. The recent Ariel-Schwab Black Investor Survey, which compares the investing habits of blacks and whites, found that 64% of African Americans are stock market investors today vs. 57% just two years ago.
Although smaller than many majority firms, minority asset managers are going after contracts with extreme ferocity. For example, New York-based Paradigm Asset Management is not hesitating to “compete head to head” with big institutional money managers like Goldman Sachs Asset Management and J.P. Morgan Asset Management.
It will take that type of audacity to succeed in the current hypercompetitive financial services environment.
Some financial companies just play by their own rules. Rice Financial Products Co. (No. 5 on the B.E. Investment banks list), this year’s Financial Company of the Year, has beat out some Wall Street monoliths because of its specialty in the financial derivatives market: interest rate swaps. In fact, the firm is one of the country’s largest investment banks to handle such complex transactions.
What will change the business landscape for the other be financial companies is the repeal of the Glass-Steagall Act, which since the Great Depression has separated the functions of commercial and investment banks. Joe Gladue, an analyst with The Chapman Co. (No. 9 on the B.E. Investment banks list), maintains that the new legislation will create “numerous new business combinations as financial services companies vie to become one-stop financial providers.” That has become increasingly evident in the number of partnerships, acquisitions and mergers among black-owned companies. In some cases, the moves have been involuntary: one of this year’s most publicized battles for the domination of black banking was Boston Bank of Commerce’s thwarted takeover attempt of Carver Bancorp, the nation’s largest African American financial institution with $413 million in assets. Even black insurers have gotten into the act: they have tried expanding market share through the upgrading of their technological infrastructure and development of strategic alliances with other financial institutions. For example, Atlanta Life Insurance Co. (No. 2 on the BE insurance companies list with $193.3 million in assets)