Ariel Alternatives has closed its $1.45 billion Project Black fund, allowing it to help minority firms grow.
The private equity business of Ariel Investments, Ariel Alternatives will use its inaugural fund to acquire minority owned businesses and help them become diverse suppliers for Fortune 500 companies.
Ariel Investments, No. 1 on the BE Asset Managers list, launched Project Black in 2021. With assets under management of about $16.2 billion as late December, the Chicago-based Ariel Investments is celebrating its 40th anniversary this year.
The new fund plans to invest in middle-market companies that are or may not currently be minority-owned, along with existing Black- or Latina-owned businesses with $100 million to $1 billion in annual revenue. Under the fund’s ownership, these companies are expected to be converted into certified minority business enterprises with the capacity to serve as Tier 1 suppliers to the Fortune 500.
Ariel Alternatives aims to forge partnerships between its network of the world’s largest corporations and its portfolio companies. That will provide minority firms both access to capital and customers.
According to a news release, Project Black will leverage the $1.45 billion in commitments from its limited partners and co-investors from the consumer retail, energy and infrastructure, financial services, healthcare, sovereign and private wealth, and technology sectors.
Each investor has committed $100-$200 million over the fund’s nominal seven-year investment period. Along with the Project Black $1.45 billion pledge, JPMorgan Chase & Co. intends to co-invest up to $200 million with the fund in future deals.
Moreover, the fund will reportedly be one of the largest private equity fund closings for a first-time manager globally.
Project Black’s investment strategy will focus mainly on pursuing companies in high-margin sectors that fulfill corporate procurement needs, including such areas as healthcare, transportation and logistics, technology, financial, and professional services.
The fresh fund’s limited partners and co-investors include the likes of AmerisourceBergen Corporation. Ballmer Group, Hobson/Lucas Family Foundation, Lowe’s Companies, Inc., Synchrony Financial, and Walmart.
Leslie A. Brun, co-founder, chairman, and CEO of Ariel Alternatives, said, “We chose to partner with large institutions that are seeking to drive widespread corporate vendor diversity. Our goal is to help close the racial wealth gap by creating minority-owned businesses of scale through access to both capital and customers.”
Mellody Hobson, co-founder of Ariel Alternatives and co-CEO and president of Ariel Investments, added, “We are scaling change. In so doing, we will redefine what it means to be a minority-owned business in the United States. We are grateful to our investors who share our mission.”