Seeking to expand beyond its base in municipal finance, M.R. Beal & Co., a black-owned investment banking firm, is wooing a corporate issuers, the African Development Bank.
In July, the New York City-based company hosted an investor meeting for the bank, with the aim of attracting new investors to the African Development Bank's securities.
In addition to boosting the African bank's investor base, M.R. Beal would like to establish a presence trading African Development Bank bonds in the secondary market, said Bernard Beal, chairman and chief executive officer of the firm.
The firm also has it sights set on becoming an underwriter of the Abidjan, Ivory Coast-based bank's debt, market sources said.
While Mr. Beal would not comment specifically on such plans, he said he did not close the door to such possibilities with the African bank. "I wouldn't rule anything out," he said.
Such efforts play into M.R. Beal's plan to move beyond its core business in municipals, especially into the area of corporate finance. Toward that end, the firm has started up an equity trading desk staffed with three professionals, begun underwriting corporate as well as some federal government-backed securities, and launched a separate investment management arm.
Mr. Beal also talks of one day moving into the areas of real estate investment banking, developing an in-house municipal research department, and offering the firm's own mutual funds.
Out of a total staff of about 40 public finance professionals, the firm employs about three federal agency finance professionals and plans to add more, Mr. Beal said.
The firm's goal in providing such a wide array of investment banking services is to become a conduit for capitalizing small business and municipalities.
"One of the things we want to do is to develop the capability for small and medium-sized firms, especially minority-and women-owned firms, and municipal governments to access the capital markets," Mr. Beal said of the expansion moves.
"We want to give good personalized service at a competitive cost. It's been a part of our business plan since we started the firm in 1988," he added.
Such a goal requires the participation of minority-owned firms in all aspects of public finance, Mr. Beal said.
Meanwhile, M.R. Beal's move into the corporate arena is a gradual one. Indeed, most minority-owned public finance firms are concentrated in municipal finance. This is because laws in several states call for municipalities to distribute a portion of their business to minority-owned firms. And an increasing number of black politicians can give the firms an initial boost in gaining business.
But only a handful of minority-owned firms have tested the corporate finance waters, which are seen as more challenging to navigate.
Despite the move to diversify, M.R. Beal will always be known principally as a municipal finance firm, said Mr. Beal, who began his finance career with E.F. Hutton & Co. in 1979.
"We started in the municipal finance business, and we're committed to the municipal finance business," he said. "Eighty-five percent of our revenues come from that area. That may go down to 65%, but it's always going to be the core of our business."
In municipals, the firm ranked 126 for all of 1991 when credit is given to each senior manager and 21 out of all underwriters when credit is given to each underwriter in a deal, according to Securities Data Co. So far this year, M.R. Beal has served as senior manager of two issues totaling $45.2 million and co-manager of 87 issues for $9.92 billion, according to the data.
During the past year, M.R. Beal has participated in several corporate underwritings for issuers such as General Motors Corp., Philip Morris Cos., and Computervision Corp. The firm has also worked on more than a dozen underwritings for issuers such as the Resolution Trust Corp., the Veterans Administration, and the Federal National Mortgage Association. Some of those deals totaled more than $1 billion, said Donna Sims Wilson, director of the federal finance group for M.R. Beal in Chicago.
While serving as a number of such corporate underwriting teams, the company has yet to hold the senior manager slot on those deals, Mr. Beal said.
But that will come in a matter of time, the executive noted, explaining that the firm likes to first gain a berth on the underwriting team and work its way up to co-manager and eventually senior management slots "the same way we did in the municipal sector. We're at the beginning stages."
In addition to corporate underwritings, M.R. Beal launched an institutional investment arm, Beal Investment Co., in 1991. The division sponsors four stock portfolios, has five clients, and $180 million under management, said James E. Francis, senior portfolio manager.
The company uses a combination of acting management and computer analysis to aid with the selection of the approximately 150 to 200 stocks held in each portfolio, Mr. Francis said.
Working with the African Development Bank would fulfill another of M.R. Beal's goals of branching out into the international banking arena as well, Mr. Beal pointed out.
Senior bonds issued by the African Development Bank are rated AAA by Standard & Poor's Corp. The bank's subordinated debt is rated AA by Moody's Investors Service Inc.
The bank, one of the word's largest black-run financial institutions, is similar in structure to the World Bank, the Inter-American Bank, and the Asian Development Bank. The bank issues bonds in several currencies, including U.S. and yen-denominated securities.
Other minority-owned firms also do business with the bank. Pryor, McClendon, Counts & Co., a black-owned investment banking firm headquartered in Philadelphia, has been a member of the bank's underwriting syndicate since 1988, said Chairman Malcomn Pryor. The firm also actively trades African Development Bank bonds, Mr. Pryor added. Another firm, Doley Securities Inc. in New Orleans, has also done work for the bank, Mr. Pryor noted.