Wall Street Journal, May 22, 2009.
NEW YORK -- The financial turmoil that has weakened or
destroyed some of Wall Street's most prominent companies
is presenting an opportunity for some lesser-known firms,
especially those owned by women and minorities.
One company that is benefiting is Williams Capital Group
LP, an African-American-owned broker-dealer and asset
manager in New York. Earlier this week, Goldman Sachs
Group Inc. said it will invest $1 billion in a
money-market fund managed by Williams Capital, more
than doubling the amount of funds the firm has under
management and pushing it over a critical size
threshold that could help it attract additional
Last month, Williams Capital was named as part of a
team assembled by Invesco Ltd. that applied to participate
in the Treasury Department's Public-Private Investment
Program, or PPIP, an effort to relieve banks of
toxic assets. Invesco, and its affiliate WL Ross & Co.,
which is controlled by money manager Wilbur Ross,
said it is willing to invest as much as $1 billion in
the program. Williams Capital is also showing up
more often as an underwriter on stock and bond offerings.
"Companies appear a bit more open to broadening their
universe of relationships," says Chris Williams, the
company's founder and chief executive. "We're not a major
firm so if someone only wants to do business with the
top four or five firms, we may not be on the list. But
as companies broaden their relationships, we are being
included more often than we had been in the past."
The nation's most powerful financial firms have long been
hesitant to forge strong ties with minority firms, in part
due to perceptions that the smaller firms lacked the
knowledge base or talent pool they required.
But as the financial crisis humbles some of the industry's
most storied firms, that view is being reassessed.
"The so-called smart money got too smart for its own good
and got shot in the foot," says William Michael
Cunningham, a socially responsible investment adviser
who tracks minority-owned financial firms.
In contrast, smaller firms tended to be more conservative,
which caused them to lag behind during the boom years but
is serving them well now.
Meanwhile, there is pressure on financial companies by
politicians and clients to broaden and diversify. That has
led to a recent flurry of large companies, from Pacific
Investment Management Co. in California to Northern Trust
Corp. in Illinois to publicly seek minority-owned and
women-owned firms that could be potential business
partners or service providers.
"As diversity has become a more important issue in this
country, many large pension funds are asking us to be open
to new ideas and new firms," said Lyle Logan, an executive
vice president at Northern Trust, which on Monday
announced that it is seeking "emerging" and minority-owned
broker-dealers to become trading partners.
Some members of Congress have been pressing the Treasury
Department to increase the participation of minority- and
women-owned firms in various asset-management and
bank-rescue programs, including the PPIP and the Troubled
Asset Relief Program, or TARP. The programs are expected
to provide millions of dollars in management fees and
investment possibilities for private companies.
Last month, the U.S. Treasury selected minority- and
woman-owned firm Piedmont Investment Advisors LLC,
of Durham, N.C., as one of three firms to manage
assets acquired by the Treasury through TARP.
One of the most prominent ways in which minority and
small firms have gained attention is through the PPIP
program. In response to pressure from Congress members
-- like Maxine Waters of California, Gregory Meeks of
New York and Keith Ellison of Minnesota -- the U.S.
Treasury asked asset managers to partner with
minority-and women-owned firms before applying
to manage PPIP assets.
A spokesman for Goldman Sachs said the firm's interest
in Williams Capital isn't specifically related to PPIP,
although Goldman hopes the partnership with Williams
Capital will expand to include other business areas.
Leading contenders for PPIP work, such as Pimco and
New York money manager BlackRock Inc., have tied up
with several such firms, according to a spokesman for
Rep. Waters. "This represents the first time in history
that we have opened up real opportunities for
well-qualified small, women- and minority-owned firms
to participate in this type of public-private
partnership," Rep. Waters said through a spokesman.
The smaller companies have been quick to seize the
opportunities coming their way. Maria Fiorini Ramirez,
the founder of New York-based macro research firm
MFR Inc., teamed up with money-management and
private-equity firm Paramax Capital Partners, to
apply for PPIP. "By adding our name to it, it made
the application I think a little bit more attractive,"
Ms. Ramirez says.
She notes that smaller firms like hers also are
benefiting from the holes caused by the collapse of
some large financial-services firms in recent months.
Revenues at her firm have increased 10% over the
past year, she says, thanks to new clients and
increased business from existing clients. MFR is now
building up its municipal-bond team by hiring seven
new executives in the past three months, and it is
looking to add more.
Minority-owned and "small firms, in particular,
have a great opportunity to take advantage of the
chaos that's still in the marketplace," Ms. Ramirez
See also: http://www.pionline.com/article/20090519/DAILY/905199976/1062
Wednesday, May 27, 2009
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