Allstate Shuns Big Banks for Bond Sale to Focus on Diversity

Allstate Corp. has solely hired banks owned by minorities, women or veterans for its bond sale, in what may be the biggest corporate deal yet managed only by diverse firms.

The insurer 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 debtoffering, according to a filing.

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 on bond deals with less responsibility for allocations.

But the Allstate transaction marks what could be the first 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. Allstate hasn’t yet publicly disclosed how much debt it’s selling, but few corporate deals have been sold by only diverse banks to date.

“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. It’s selling the debt in two parts to help fund the $4 billionacquisition of National General Holdings Corp., the auto insurer’s largest takeover ever.

Breaking Through

Diverse firms are making more 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 also getting more business in what’s been arecord year for corporate debt issuance, and increasingly taking onmore significant roles.

Read more: Google pays record fees to minority banks for bond underwriting

Citigroup worked exclusively with women, veteran and minority-owned broker-dealers on a recent $2.5 billionoffering to expand affordable housing, while Verizon Communications Inc. tapped some of the same firms tolead 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 by Katherine Chiglinsky, Andrea D Niper, Dan Covello, Danielle Moran, and Rebecca Sgrignuoli

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