WWR Article Summary (tl;dr) As Robert Channick reports, “the inaugural initiative, dubbed Project Black, aims to fill a massive diversity gap in the corporate America supply chain.”
Chicago-based asset management firm Ariel Investments launched a new investment arm Wednesday with a mission to fund and grow minority-owned businesses.
Ariel Alternatives, which has secured $200 million in initial funding from JPMorgan Chase, plans to invest in minority-owned businesses to position them as suppliers to Fortune 500 companies.
Leslie Brun, 68, an investment banking veteran, will serve as CEO of Ariel Alternatives. He said the inaugural initiative, dubbed Project Black, aims to fill a massive diversity gap in the corporate America supply chain. Fortune 500 companies spend about 2% annually on minority-owned suppliers, well short of the 10% to 15% spending goals many corporations set last year, Brun said.
Despite “announcements and pronouncements” by corporations about increasing the amount they spend with minority-owned suppliers, many have difficulty finding those with enough capacity to meet their needs, Brun said.
“We’re intending to create those minority suppliers of scale, in concert with our Fortune 500 relationships, to provide the solution to their issue, as well as create the opportunity for us to then leverage that into the social impact initiatives that we have,” Brun said.
Project Black plans to focus on suppliers to health care, transportation, manufacturing, media and marketing, technology and other industries.
Brun said minority-owned suppliers will have better access to funding and executive talent to grow more rapidly and bring new jobs to communities in need.
Major corporations adopted more ambitious diversity and inclusion goals last year in the wake of George Floyd’s death at the hands of Minneapolis police and the civil unrest that followed.
Ariel Investments co-CEO Mellody Hobson, 51, an influential Chicago executive who was recently named nonexecutive chair of the Starbucks Corp. board, cofounded Ariel Alternatives with Brun.
The project grew out of a conversation between JPMorgan CEO Jamie Dimon and Hobson, who also sits on the JPMorgan board, about promoting minority-owned businesses, Brun said.
The $200 million JPMorgan has committed to Project Black is part of the bank’s October pledge to invest $30 billion over five years to advance racial equity and provide economic opportunity in underserved communities.
In addition to investing in existing minority-owned businesses, Project Black plans to transform middle-market companies that are not currently minority-owned into certified minority businesses by infusing them not only with capital, but minority executive talent, Brun said.
To qualify as a certified minority business, suppliers must be at least 51% minority owned, managed and controlled, according to standards established by the National Minority Supplier Development Council. The membership organization defines minority group members as at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic or Native American.
Ariel Investments was founded in 1983 by John Rogers, who serves as chairman and co-CEO with Hobson. The firm has about $15 billion under management and is 87% minority-owned, according to its website.
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