Ariel Alternatives, a subsidiary of Ariel Investments, on Wednesday Feb 1 said it had raised $1.45 billion for a private equity fund to invest in diverse middle-market companies, with the goal of transforming the vendors to be able to supply Fortune 500 companies.
Ariel's new fund — Project Black — raised $1.45 billion through commitments from limited partners such as Nuveen; the $450 billion Qatar Investment Authority, Doha; and Walmart, as well as commitments from other partners in retail, energy, infrastructure, finance, health care and technology.
Co-investors include Synchrony Financial and Truist Financial. Each investor committed $100 million to $200 million over the fund's seven-year investment period. J.P. Morgan Chase & Co. will also invest up to $200 million alongside the fund for future deals.
"We chose to partner with large institutions that are seeking to drive widespread corporate vendor diversity," said Leslie A. Brun, co-founder, chairman and CEO of Ariel Alternatives, in a news release.
Ariel Alternatives was also co-founded by Mellody Hobson, who is also chairman and co-CEO and president of Ariel Investments.
"Our goal is to help close the racial wealth gap by creating minority-owned businesses of scale through access to both capital and customers," Mr. Brun said.
"Ariel Alternatives is humbled to have the trust of our investors as we aim to close the racial wealth gap by changing what it means to be a minority-owned business — both in practice, and in perception," said Arielle Patrick, spokeswoman at Ariel Investments, in an email.
Project Black will seek to invest in six to 10 midsize companies with $100 million to $1 billion in revenue in order to meet vendor needs for large companies in industries such as health care, media and marketing, manufacturing, technology and transportation.
Once acquired, Ariel plans to partner with portfolio companies to pursue growth strategies and meet with its network of corporate partners through a "demand aggregation process" to ensure that those companies acquired can meet unfulfilled tier-one supplier needs.
Tier-one suppliers provide parts and materials directly to companies.
Plans for Project Black were first announced in February of 2021.
Ariel was advised by Kirkland & Ellis for fund formation as well as the McKinsey Institute for Black Economic Mobility for research and insights for the project.
Ariel's hope is that the terms Black or brown businesses conjure images of consequential enterprises with ample capital and revenues rather than just that of a small business, Ms. Patrick added.
Ariel Investments had $16.2 billion in assets under management as of Dec. 31.