Return on Inclusion | February 6, 2023

Ariel Alternatives’ secures $1.5 billion to build the pipeline of minority-owned suppliers

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, February 6 – Black, Brown, Indigenous and other diverse-led businesses receive just 2% of Fortune 500 companies’ procurement spend, according to private equity firm Ariel Alternatives. Corporations in the U.S. have pledged $50 billion to increase supplier diversity by 2030.

Black-led Ariel Alternatives has raised $1.5 billion to buy up mid-sized companies that aren’t minority-owned, overhaul management and connect them to corporate procurement offices. It will also invest in mid-sized minority-led businesses and support their inclusion in corporate supply chains.

“Project Black” secured backing from Walmart, Merck & Co., Lowe’s and Salesforce, The Wall Street Journal reports. Microsoft’s former CEO Steve Ballmer and his wife Connie Snyder invested $400 million. JPMorgan Chase will co-invest up to $200 million alongside Ariel as part of its $30 billion racial equity pledge.

The firm will use the capital to acquire a majority stake in up to 10 companies. Last year, it acquired Sorenson, a communications company serving the deaf community. 

Supplier gap

Ariel Alternatives, a subsidiary of $16 billion asset manager Ariel Investments, launched Project Black in 2021 to accelerate corporate supply-chain diversity commitments.

“The problem was that diverse firms didn’t exist at a scale that could take advantage of the opportunity,” Ariel’s Les Brun told the Journal.

By focusing on mid-sized businesses, Project Black hopes to “change the paradigm around Black and Brown businesses, and to have people stop thinking of them as small and disadvantaged but as equal competitors,” he added.