Reaching the Apex - Black Enterprise

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Black Enterprise Magazine July/August 2018 Issue

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The gentlemen at Rice Financial Products Co. have taken what used to be the financial market’s dirty little word–derivatives–and successfully used their expertise to build a black-owned finance firm that structures complex interest-rate swaps and other derivative products for state and local governments. But apparently that wasn’t enough for CEO J. Donald Rice. Now the New York-based firm has expanded its business scope with a hefty acquisition.

Rice recently announced the purchase of one of the largest minority-owned broker dealers in the nation, Houston-based Apex Securities (No. 5 on the BE INVESTMENT BANKS list with $508 million in senior managed issues). The terms of the deal were not disclosed, but Rice says it will greatly aid his company in procuring a larger piece of the municipal underwriting action.

The marriage of Rice Financial and Apex is the latest union among black-owned securities firms and indicates a sea of change in attitude among the group, which used to be fiercely independent. Increasing competition from minority- and majority-owned firms and a greater need for capital has forced many firms to merge or forge life-saving strategic alliances.

Over the last several years, many Wall Street brokerage houses have either voluntarily exited or been forced to leave the muni business amid a drying market. Yet the team at Rice says their departure simply creates a unique void that Rice Financial can fill. “There’s still a significant opportunity for a full-service black-owned firm in the municipal marketplace,” says Brian D. Nevel, who heads Rice Financial’s derivative marketing efforts. “As other firms have departed the industry for various reasons, a well-managed firm can still enjoy a great deal of success.”

So far, the track record for both firms has been impressive. Rice Financial has already executed over $3 billion of derivative products since the firm opened its doors four years ago. Among its completed deals are a $140 million interest rate swap for Dade County, Florida, and a $300 million derivative forward agreement completed for Alameda County, California. Rice says those deals only whetted his appetite for more. But his firm needed the ability to underwrite bonds if it wanted to expand.

“It was a strategic decision we made as a group because we knew we needed a broker dealer. Based on the good relationship we had with the people at Apex, we thought the combination of these two firms made sense, so we started our conversations with the firm last fall,” says Rice. “Apex has extremely strong relationships in its region and underwrites about $5 billion annually in the Southwestern market. We were not able to underwrite bonds before, so this vastly expands the breadth of what we can do for clients.” Rice adds that former Apex chairman Rodney Ellis will become a minority partner in Rice Financial.

Headed by Ellis, Apex has been listed among the top 10 minority-owned investment banks for the past five years. Last year, Apex served as either lead or co-manager on transactions totaling over $4.7 billion.

“As the larger firms fight for increased market share,

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