Allstate Shuns Big Banks in Bond Sale
In selecting firms to underwrite its debt offering, the insurer looked only at “diverse” businesses.
Allstate Corp. is borrowing $1.2 billion to help fund its $4 billion acquisition of National General Holdings Corp. The insurer has solely hired banks owned by minorities, women, or veterans for its bond sale—in the biggest corporate deal yet to be managed only by diverse firms.
Companies typically work with large banks like JPMorgan Chase & Co., Bank of America Corp., and Citigroup Inc., which lend to corporations for small fees in the hopes of winning more lucrative capital-markets business. Diverse firms, which are mostly structured as boutique investment banks, usually have smaller roles in bond deals with less responsibility for allocations.
But Allstate enlisted Loop Capital Markets, Academy Securities, Samuel A. Ramirez & Co., Siebert Williams Shank & Co., AmeriVet Securities, Cabrera Capital Markets, C.L. King & Associates, Penserra Securities, and R. Seelaus & Co. to underwrite its debt offering, according to a filing. This transaction marks the first bond sale of substantial size that diverse underwriters are leading without any bulge-bracket banks, according to data compiled by Bloomberg and people with knowledge of the matter.
“You can’t gain experience unless you actually get an opportunity,” said Sidney Dillard, head of corporate investment banking at minority-owned Loop. “It gives credibility to the capabilities of our firms and starts to move the needle on the traditional construct on Wall Street of who are the firms that can actually do these deals. It will get us more into the mix.”
Allstate had no immediate comment.
Diverse firms are making progress in the corporate bond market in 2020 amid a social reckoning on racial issues, which has in turn benefited banks owned by minorities, women, and veterans. They’re getting more business in what’s been a record year for corporate debt issuance.
Citigroup worked exclusively with women-, veteran-, and minority-owned broker-dealers on a recent $2.5 billion offering to expand affordable housing, while Verizon Communications Inc. tapped some of the same firms to lead its green bond offering in September.
Unlike the corporate bond market, municipalities have long entrusted diverse firms to lead their debt sales, putting firms like Siebert, Ramirez, and Loop in the top 20 of negotiated municipal bond managers. In the U.S. investment-grade corporate market, Loop is the only diverse bank in the top 40, according to data compiled by Bloomberg.
—With assistance from Katherine Chiglinsky, Andrea Niper, Daniel Covello, Danielle Moran & Rebecca Sgrignuoli.
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