US non-public fairness range mission for Black college students affirms dedication | USAEMALL.com

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A high-profile philanthropic enterprise founded in the wake of the 2020 George Floyd murder to boost the number of Black students pursuing private equity careers is sticking to its mission despite a sharp retrenchment in corporate diversity programmes.

AltFinance, endowed with a $90mn commitment from Apollo Global Management, Ares Management and Oaktree Capital less than four years ago, told the Financial Times that its corporate finance training and placement programmes developed for students at Historically Black Colleges and Universities (HBCUs) remain unchanged.

The three founding firms reiterated their 10-year commitment to AltFinance and said: “We have and will continue to pursue ways to access the best talent for consideration for roles at our firms.”

Marcus Shaw, chief executive of AltFinance, said: “Nothing has changed at the core of what we do: prepare HBCU students for careers in alternatives and related fields.”

So-called diversity, equity and inclusion programmes have been cancelled or softened across Corporate America following the election of Donald Trump and a Supreme Court ruling in 2023 that invalidated race-based affirmative action efforts in US college admissions.

Fewer than a tenth of private equity executives are Black, according to a 2023 study from McKinsey.

AltFinance has recruited 200 fellows from eight HBCUs including Howard University and Spelman College, who are provided intensive coursework in financial modelling and accounting.

The programme includes mentorship from private equity investors as well as the chance to then interview for trainee programmes upon college graduation. Almost 50 AltFinance alumni are working in full-time roles at top Wall Street firms, according to the organisation.

AltFinance received attention for the scale of its commitment from three of Wall Street’s most feared and competitive firms which had few Black and Latino leaders or previous ties to HBCUs.

“At Apollo, we recognise that we have been the beneficiaries of opportunity, and that it’s incumbent upon us to create opportunity for a broader group of talent,” Marc Rowan, chief executive of Apollo, said at the time of AltFinance’s founding. Rowan was at one point in the running to be Trump’s Treasury secretary.

AltFinance’s backers view it as a recruiting tool after their big asset growth in recent years has forced them to widen student recruiting efforts, according to people familiar with their thinking. In the past, private capital groups have recruited new associates by raiding well-trained analysts at large investment banks.

The AltFinance programme is mostly focused on training and mentorship and does not come with any specific hiring quotas from participating firms. Since HBCUs admit students of all races, the programme is not limited to minorities.

Among the most popular charitable causes on Wall Street has been Sponsors for Educational Opportunity, a group that has since 1977 provided intensive training and mentorship to Black and Latino college students to prepare them for entry-level jobs in finance. Some SEO alumni have risen to the top of the private equity industry, becoming executives at firms such as KKR, Blackstone and Lazard.

SEO, whose co-founder and board chair is the leveraged buyout tycoon Henry Kravis, declined to comment when asked about its programme in the wake of the assault on DEI.

Kathryn Wylde, an SEO board member who runs the influential corporate trade group Partnership for New York City, said diversity programmes remained largely popular at financial services firms, particularly with younger rank-and-file employees.

“Wall Street can’t afford to have any group either left out of the pipeline or not wanting to work for them because they don’t feel that [financial institutions] have values that are consistent with having a fair and open society,” Wylde said.

She added that SEO and other similar groups had been careful to adjust the language in their promotional materials to adhere to changes in the law over race-focused programmes.

Harlem Capital, a high-profile Black-owned private equity firm that launched in 2015 with the backing of TPG, told the FT that endowments will probably pull back from diversity initiatives for investment managers due to pressures over their funding and the potential for them to lose federal tax benefits.

Henri-Pierre Jacques, Harlem Capital’s co-founder, said this would probably lead diverse managers to struggle to raise new funds and force many to close their doors.

“We knew the George Floyd moment would pass. I don’t think we expected it would pass as deeply and as quickly as it did,” said Jacques.

He noted that while the current administration has attacked corporate diversity efforts in a purported effort to support meritocracy, they have not gone after legacy college admissions and other affinity groups that have kept Wall Street’s top ranks homogenous.

“DEI is an easy target because it is a formal system. It is hard to take down informal systems,” said Jacques.