In a major November bond sale, Allstate Corp. hired only investment banks owned by minorities, women, or veterans. The move, announced by Allstate on Nov. 19, represents the largest corporate deal to be managed solely by such financial institutions.

The insurance giant has also announced that it’s planning to double its trading volume with diverse banks in 2021.

Key Takeaways

  • In a November 2020 bond offering, Allstate chose to work exclusively with minority-, women-, and veteran-owned investment banks.
  • Citigroup and Verizon have also conducted recent bond offerings with major participation by minority-owned banks. 
  • Allstate's $1.2 billion offering is being used to help finance the acquisition of National General Holdings Corp., another auto insurer.

Verizon and Citicorp Have Made Similar Moves

Allstate isn’t the first major company to engage minority-, women-, and veteran-owned businesses for massive deals. In September, telecommunications giant Verizon made an offering worth $1 billion of its green bonds, which will help the company transition to using more renewable energy. Two of the four lead underwriters were African-American-owned investment banks.

Then in October, Citigroup said it partnered exclusively with women-, veteran-, and minority-owned broker-dealers in the sale of $2.5 billion in social bonds. The bonds will be used to help create affordable housing for low- and moderate-income Americans.

Allstate’s sale of $1.2 billion in corporate bonds was used to help finance the acquisition of the auto insurer National General Holdings Corp., a $4 billion deal that is scheduled to close in early 2021.

Involved in the offering were Loop Capital Markets, Academy Securities, Samuel A. Ramirez & Co., Siebert Williams Shank & Co., AmeriVet Securities, Cabrera Capital Markets LLC, C.L. King & Associates, Penserra Securities LLC, and R. Seelaus & Co. LLC.

The Beginning of a Trend?

These moves by Allstate, Citigroup, Verizon, and others have helped make room for diverse banks to have a seat at the table. Historically, companies have worked with large banks on such deals, in part because they can lend for small fees. 

The decision by major corporations to work more with minority-owned businesses comes at a time when racial equity issues are getting more attention than they have in the past. While it’s a small step in the grand scheme of things, it’s an important one.