By Laura Cooper, Wall Street Journal, Private Equity Pro
Aiming to increase racial and gender diversity within the executive ranks of portfolio companies to drive greater returns, two industry professionals have launched Inkwell Group.
Chijioke Asomugha, formerly of Cyprium Partners, and Marques Martin, previously of Riverside Co. and H.I.G. Ventures, co-founded the firm, which seeks to bolster lower midmarket companies “through the addition of diverse executive and boardroom leadership,” according to a news release.
The new firm, with offices in Washington, D.C., and Cleveland, said it plans “to leverage the proven power of racial and gender diversity to enhance business performance and build value.”
According to a 2015 report by McKinsey & Co., companies in the top quartile of gender diversity were 15% more likely to have financial returns above the median, while companies in the top quartile of racial and ethnic diversity were 35% more likely to have returns above the national industry median.
Mr. Martin said he and Mr. Asomugha met in Cleveland while both men were working in the private-equity industry. He said they decided to launch the firm after seeing “the real value that private equity can bring to lower middle-market companies.”
Mr. Martin said while Inkwell is primarily focused on driving attractive returns, he noticed that private-equity firms haven’t taken advantage of the “facts that show the more diverse the management teams are, the higher the returns.”
Inkwell targets control investments in what it calls the “fragmented industry subsectors” in health care, financial services, industrial manufacturing, and media and telecommunications.
The firm seeks to invest $3 million to $30 million of equity per platform in manufacturing and service companies with annual earnings before interest, taxes, depreciation and amortization of up to $10 million.
Inkwell said it is investing on a deal-by-deal basis “prior to a debut formal fund within three years.”
The firm is partnering with family offices, high-network individuals and possibly a few institutions to make acquisitions, said Mr. Asomugha. Inkwell plans to raise a fund in the next two to three years, he said.
The firm has yet to make an acquisition, but is aiming to complete one in early 2017, said Mr. Asomugha.
Mr. Martin said the firm will be finding diverse talent to staff the executive roles of portfolio companies through his and Mr. Asomugha’s networks. He added they have 10 professionals lined up to play various roles in companies. He said these roles include executive positions, operating partners and advisers.