Private equity has tried for years to shed its reputation as one of the least diverse places to work in finance. But now three industry heavyweights have taken it a step further, pledging millions to a diversity initiative aimed at bringing in more Black employees.
Apollo Global Management, Oaktree Capital and Ares Management have announced a 10-year, $90 million partnership with three Historically Black Colleges and Universities (HBCUs) to train and provide career opportunities for Black students. Dubbed “AltFinance: Investing in Black Futures,” the program will include a mentored fellowship component, a scholarship program and a virtual institute engineered by The Wharton School of The University of Pennsylvania.
Students at Morehouse College, Spelman College and Clark Atlanta University will be eligible for the scholarship and mentoring program, and the virtual school will be widely available to students attending all HBCUs. Apollo, Oaktree and Ares will each commit $3 million annually for the next decade to fund the initiative through the nonprofit Alt Finance Corporation. The initiative is expected to launch in the first half of 2022 and could eventually expand beyond the three HBCUs.
A report from McKinsey earlier this year found that in 2020, private equity deal teams were just 1% to 2% Black. Some of the biggest PE shops have started to take action. Last month, The Carlyle Group reportedly announced CEO Kewsong Lee’s pay would be partly based on ensuring Carlyle portfolio companies will have at least 30% of their board filled with diverse members by 2023. And the firm has also offered a $4.1 billion credit facility to portfolio companies, with the price of debt tied to reaching the 30% board diversity benchmark.
Late last year, Blackstone also announced an initiative to ensure that one-third of the members of its portfolio companies’ boards had “diverse backgrounds.” KKR has used a diversity and inclusion council since 2014.
PE has some recent history with Morehouse College. In 2019, Vista Equity Partners founder Robert Smith announced during graduation that he would pay off the student debt for that year’s graduating class, a total of roughly $34 million.
