In a deal that creates the first financial services firm to be 100%-owned by a Native-American tribe, the Lower Brule Sioux Tribe acquired New York-based Westrock Group today for an undisclosed amount.
Westrock, which has an independent broker-dealer as well as asset management and wealth management units, becomes one of the largest minority-owned financial services firm in the country. In fact, Donald Hunter, Westrock’s chief executive officer, says that the being minority-owned was a major reason he was attracted to the deal.
Hunter was approached with the idea of being acquired about two and a half years ago, but wasn’t interested. However, when he learned that an Native American tribe in Lower Brule, S.D. was behind the inquiry, and he realized the advantages of being minority-owned, he began to consider it and the discussions began.
“Being minority-owned gives us access to a lot of public pension [business] and Fortune 500 pensions that we wouldn’t have been [considered for] before,” says Hunter, who will stay on as the head of Westrock. Many large companies and public entities earmark a portion of their outsourced business for minority-owned business.
In fact, this deal gives Westrock such a shot in the arm that it catapulted into the ranks of the mid-tier fiancial world, similar to what Donaldson Lufkin & Jenrette had been about 10 years ago, Hunter said. (DLJ was later bought by Credit Suisse in 2000). Hunter says that Westrock, with 150 employees, generates about $22 million in revenue.
The opportunities presented by this deal also enticed Creighton Capital Management to jump in the mix. Creighton, an asset management firm, formed a joint venture today with Westrock that will enable Westrock to offer Creighton’s quantitative products.
A self-proclaimed sudden entrant into the mid-tier, Hunter cites Jefferies and Dillon Reed as his biggest competitors now, albeit ones that he “had to catch.”
Tribe officials were not available for comment but according to a public release, they plans to use the profits from its new acquisition to improve housing, education, healthcare and infrastructure for their community.
Hunter also says that a financial-services company also gives the tribe a certain level of status among other tribes, not to mention access to advisory services and other financial services in addition to simply a profit stream.
Indeed, Westrock’s Tribal Services Advisory Group was formed specifically to offer advisory services to the Lower Brule Sioux as well as other tribes around the country, Hunter says.
