Allstate Investments has committed $100 million to set up an emerging manager programme that will provide capital to real estate and private equity firms that count women or minorities among their senior managers or that partner with or invest in women- and minority-owned businesses.
The programme will be open not only to firms that are majority owned by women or minorities, but also those that employ women or minorities as investment professionals participating in the firm’s carry. Additionally, the programme will consider real estate firms that invest in underserved or urban markets with women- or minority-owned development and operating partners and private equity firms that invest in women- and minority-owned businesses.
“It’s a call to action,” said Edgar Alvarado, Allstate’s head of real estate equity. Even after 25 years in real estate, he noted the lack of diversity in the private equity and real estate industries, which “is a problem. This is what we’re doing to address it.”
Such an initiative “gives us the ability to identify and grow good firms,” Alvarado added. Allstate currently manages a total of $100 billion in assets, of which $10 billion is in real estate and more than $2.6 billion is in private equity.
Under the programme, the number of funds that a manager has raised, the size of the funds and the number of years it has been in business will hold less weight than the firm’s diversity practices, according to Alvarado. Allstate anticipates making capital outlays of $5 million to $10 million each to 10 to 20 emerging managers, which typically will be raising funds between $50 million and $100 million in size.
Allstate, which will invest in emerging managers through a fund of funds separate account, plans to select a manager to oversee the mandate in the next three months. On the shortlist are Credit Suisse Asset Management’s customized fund investment group, which manages $200 million of the Teacher Retirement System of Texas’ $500 million real estate emerging manager programme, and JPMorgan, which also has an established track record investing in emerging managers.
While the selected manager will have discretion over the $100 million pool, Allstate will work with the firm to come up with specific investment criteria and guidelines. It plans to have the programme up and running by the end of the year.
Allstate is the latest private equity real estate investor to establish an emerging manager programme, following in the footsteps of US pension plans such as the California Public Employees Retirement System, Texas Teachers and the Employees Retirement System of Texas.