Antony Ressler, co-founder of Ares Management, photographed with AltFinance Fellowship students.
Marcus Shaw, AltFinance
The search for bigger profits and top talent is nothing new on Wall Street, but some companies are turning to an almost untapped resource: historically black colleges and universities, or HBCUs.
The AltFinance Fellowship is the brainchild of leading alternative investment firms Ares Management, Apollo Global Management and Oaktree Capital Management. The three companies are investing $90 million over 10 years in the program, which provides paid experience, mentoring and networking opportunities to more than 100 students at HBCU.
Selected students also receive a stipend of up to $10,000 if they are sophomores, while juniors and seniors can receive up to $15,000. Partner schools include Clark Atlanta University, Howard University, Morehouse College and Spelman College.
The program aims to give students of color a chance in a booming industry that isn’t the most diverse. According to data provider Preqin, the private equity, private credit, and commercial real estate industries manage approximately $10 trillion in assets. Blacks made up 1% to 2% of private equity investment deal teams in 2020, according to management consulting firm McKinsey.
“This is not a charitable activity,” Howard Marks, co-chair of Oaktree Capital Management, told CNBC. “I think it has some socially beneficial aspects. But that’s not the only reason we do it. We also do it because we believe it can enrich our organizations.”
According to a 2022 McKinsey report, chief investment officers of leading institutional investors said they would allocate 2.6 times the capital to more ethnically and racially diverse private equity deal teams if they were to choose between two comparable firms .
A way to build wealth
Marc Rowan, CEO of Apollo Global Management and Marcus Shaw, CEO of AltFinance
AltFinance also gives students the opportunity to enrich themselves. According to Preqin, alternative investments have been booming since 2000 after the dot-com bubble. Additionally, employee compensation in the industry can be lucrative even as new graduates begin their careers.
In 2020, the median base salary for employees — an entry-level position — at private equity firms was $137,000, according to data from executive search firm Heidrick & Struggles.
“It’s the potential to increase the wealth of generations,” Brittany Clark, a sophomore at Howard University, told CNBC.
“Coming from humble beginnings myself, I didn’t know much about alternatives or finance or the jobs and opportunities available to me,” said Joseph Ramirez, senior of Morehouse College. “Now I’m learning the tools necessary to create generational wealth.”
AltFinance CEO Marcus Shaw said the program’s potential impact extends beyond Wall Street.
“The students we have in our program were destined for greatness, whatever path they choose to take.” Shaw to CNBC. “But by giving them the opportunity to look behind the veil and see what’s in store for them in their alternative investment careers, [it] creates another opportunity for them to build wealth for themselves, their families and their communities. There’s a trickle-down effect…that will not only create stronger families for them, but stronger communities as well.”
Antony Ressler, co-founder of Ares Management, and Marc Rowan, CEO of Apollo Global Management, both said the grant has the potential to increase industry exposure in the short term and companies’ profits in the long term.
“We’re a culture of finding what’s not well understood,” Rowan told CNBC. “And that increasingly comes from having different viewpoints around the table, different backgrounds and different ways of looking at things and then different development skills [and] convey a message to a multitude of customers.”
“The more prospects you have, the better you are as an investor.” Ressler to CNBC. “So the idea of being a more diverse company is positive for us. It’s good for business. It’s good for our investment decisions. It’s good for our employee base. And that’s what we think we should do.”