Bill Ackman to invest $4 billion in minority-owned investment banks

Billionaire and investment mogul Bill Ackman, at the Forbes Philanthropy Summit, announced his plan to team up with minority-owned investment banks for a major business venture, specifically, female, Black, and veteran-owned investment banks.

Billionaire private equity investor Robert F. Smith also laid out his plan to cover up the racial gap and put a stop to systemic racism in America. Some of his ideas included the urgency of Wall Street and America’s largest corporations to take deliberate actions and decisions to support Black-owned businesses. Supporting such firms with capital will enable a multiplier effect for minority businesses and communities at large, creating more opportunities for them, as well as, closing up the wealth gap between the White majority and the Black minority, Smith noted.

The issue of bridging the racial wealth gap has become a topic of national discussion, as a result of this, many are of the opinion that the discussions must be backed-up with action.  

Ackman, who is the owner of the hedge fund Perishing Square Capital Management announced his plan to list a $4 billion publicly traded worth of capital to make a major investment in selected investment banks, according to Forbes. Citigroup, Jefferies, and UBS are listed as the book-runners for the deal. 

While the deal’s co-managers include Loop Capital Markets, Siebert Williams Shank, Roberts and Ryan, CastleOak Securities, Ramirez & Co., and C.L. King & Associates. These investment banks are either Black-owned, female-owned, Latino-owned, or veteran-owned investment banks.

The deal includes special features such as the allocation of $18 million— out of the $86 million in fees paid to underwriters laid out in the registration statement— to minority and veteran-owned firms.

CastleOak Securities is among the largest African-American owned investment banks in America. The firm was co-founded by David R. Jones (CEO) in 2006 and has since been a co-manager on bond deals. Some of its partners and clients include Bank of America, Royal Bank of Canada, Citigroup, and AT&T.

Loop Capital is also one of the largest minority-owned investment banks on Wall Street. It was co-founded by James Reynolds Jr. in 1997. It is also a full-service investment bank like CastleOak. Its operations span across equity underwriting, public finance, merger advisory, sales and trading, and tax-exempt fixed-income trading.

Ramirez & Co. is one of the largest and oldest Hispanic-owned investment banks in America. The firm was founded by Samuel A. Ramirez in 1971 and has since grown into a leading firm in municipal finance and fixed income.

Seibert Williams Shank & Co., is one of the largest Black and women-owned investment banks on Wall Street. The firm was created in 2019 through a merger of Siebert Cisneros Shank and The Williams Capital Group, founded in 1996 and 1994, respectively.

The Ackman investment banking deal may just turn out to be the biggest deals of the year. Though it is fixed at $4 billion, it is said to be potentially worth $6 billion. There is also the possibility of having other companies get on board. The Minority Bank Trade Association, a 22-member bank association also plans to seek $10 billion for the purpose of funding the Small Business Administration and the Treasury Department created in the PPP funding for Community Development Financial Institutions.