As some dealmakers struggle to find adequate targets, other firms are working to shine a light on underrepresented businesses. With the industry potentially taking a new turn to focus on minority-led and owned targets, PE pros like Jacmel Growth Partners‘ Nick Jean-Baptiste share their thoughts on what’s next.
Jacmel Growth Partners is a private investment firm, that targets family-operated, lower-middle-market businesses with a focus on improving employees and their communities. Jean-Baptiste, the founder and managing partner of Jacmel Growth Partners, says the importance of the establishment of diversity in the growth of a firm greatly attributes this to the overall large-scale growth of prospective firms.
Jean-Baptiste says that the game is changing and firms may have to begin thinking about things differently. “The treatment of people is really important and that leads us to really lead and be mindful about our office of impact, which helps us track a lot of different metrics that other people in private equity don’t focus on. Whether it’s lives bettered, how did we make people’s lives better today? It’s more than just a paycheck. It’s things like did we make your insurance better for you today? Did we think about your childcare? Did we think about your upward mobility?”
Last week Ariel Alternatives closed its inaugural fund, Project Black LP, with $1.45 billion in capital commitments. The fund is focused on investing in sustainable, minority-owned businesses and intends on developing firms that may not have started as minority enterprises upon acquisition into certified minority business enterprises.
Ariel Investments has identified that 95 percent of minority business enterprises have less than $5 million in revenues. The firm took this stat as proof of the need for private equity backing for diverse-led targets. Additionally, Baptiste notes the importance Ariel and Project Black in co-investing alongside an established player such as JPMorgan Chase & Co.
“I think the team is doing an incredible job. I have been around this concept of partnering with the NMSDC (National Minority Supplier Development Council) since 2013,” says Jean-Baptiste. “I think it is a game changer. I think when you see leaders of Project Black speaking at the 50th anniversary of the NMSDC Conference in New Orleans, you just see the game is changing. What’s most exciting about it as a diverse fund manager, myself, is that anything they can do we can do too right?”
We have spent a lot of time discussing the burgeoning change that ESG and DEI initiatives have pushed on the private equity world. Much of this discussion has been promoted from the limited partner level. Now, investment banks and private equity firms are bringing diversity initiatives to the forefront and have left change in their wake.
Let me know your thoughts on Ariel Alternatives Project Black Fund and its long-term effects on the private equity market at [email protected].