Far from any population center, Michael Jandreau, the chairman of the Lower Brule Sioux Tribe, knew even an enormous casino couldn't generate enough revenue for the South Dakota tribe.

So he did the next best thing: he bought a wealth management company, Westrock Group Inc. in New York.

Being the only 100% tribally owned wealth management company will distinguish Westrock from other minority-owned firms, even those with Native American investors, in the competition for federal and state government pension fund business.

There are a number of "minority-owned wealth managers run by women and African-Americans that are able to generate business from various governments, municipalities and private corporations," said Burton Greenwald, of BJ Greenwald Associates in Philadelphia. "Large institutions seek out these firms. … There is a lot of money to be made in the name of diversity."

Analysts said many tribes have opened casinos and invested in wind farms or solar energy, but none have considered the financial sector as a way to generate revenue. The Lower Brule tribe, Jandreau said, is looking to diversify its revenue sources and participate directly in the capital markets.

Donald H. Hunter, who will remain Westrock's chief executive, said he wants to take advantage of the company's new status as a minority-owned wealth management company to attract more pension funds. Westrock also plans to create a tribal assistance services unit to advise tribal governments on financial matters.

Hunter said his hope is that by going after pension fund assets, Westrock, with $1.4 billion of assets under management, will be able to increase that number tenfold in the next 12 months.

Westrock also will now be able to offer retail brokerage companies' products, because these outfits often syndicate their wares through minority-owned firms. Larger brokerage firms, including Goldman Sachs Group Inc. and Morgan Stanley, give 7% to 15% of their underwriting to minority firms, Hunter said.

"For Westrock, this takes us from being a good firm in New York to being a major midtier player," Hunter said.

Experts caution that minority ownership can be an advantage but not the sole determinant of getting business with public or private players.

"In government contracts, minority firms will certainly make the first and second cuts because they are minority-owned, but ultimately they will have to deliver strong results to continue to generate business over time," said Geoffrey Bobroff of Bobroff Consulting in East Greenwich, R.I.

Hunter's growth target is ambitious, Bobroff said.

"Running a billion dollars and running $10 billion are two very different challenges," he said. "Managing growth at a smaller company can be accomplished with a smaller team of people, but as you add people it gets more challenging."

Westrock announced last week that it had launched a joint venture with Creighton Capital Management and Jim Creighton, the former global chief investment officer at Barclays Global Investors, to help manage some of the pension fund assets it seeks.

Hunter said that Westrock, which has 150 employees and was founded in 1995, will look for more opportunities to create joint ventures to enhance its institutional asset management capabilities as it attracts pension assets.

The tribe, nestled on a reservation 300 miles from both Sioux Falls, S.D., and Rapid City, S.D., has found some innovative ways to raise money. In addition to buying Westrock, it owns an agricultural group, Lower Brule Farm Corp., and a construction company, Lower Brule Employment Enterprise. The tribe's Lakota Foods is one of the largest growers of popcorn in the United States.

The tribe intends to use profits from Westrock to improve its housing, education, health care and infrastructure. A portion of the profits would be reinvested in Westrock.

"They are trying to generate capital so that they can buy back some of the land that they lost from treaties and survey errors," Hunter said. "Lower Brule is not really a population center. They have a casino, but it's probably smaller than Westrock's office. They have had to use their brains to advance themselves."

Jandreau will be chairman of LBC Western Holdings LLC, Westrock's holding company. The price of the deal, which closed last week, was not disclosed.

Hunter said he hopes over the next three to five years to open more offices nationally, including possibly in Washington, Chicago, San Francisco and Florida, and said he could envision doing some of the back-office services from the reservation in South Dakota. "But that is just a thought right now."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.