Johnson Starts Financial Firm

BET Founder Aims to Build Major Black-Owned Investment Company

Black Entertainment Television founder Robert L. Johnson said yesterday that he is launching an institutional investment management firm as part of a broad effort to create what he hopes will be a major black-owned financial services operation.

Johnson said the firm, which will sell its services to large investors such as pension funds and endowments that want to put money into hedge funds, is a key part of his "second act" after his career in cable television.

"I'm approaching this in the same way I did 25 years ago with cable television," Johnson said. "Asset management is a sector that is open to opportunities by African Americans who can bring real talent to the effort. I see this becoming a major African American entity in this sector."

The as-yet-to-be named company will be majority owned by Johnson, with Deutsche Bank taking a minority stake. Deutsche Bank, a German financial services conglomerate with major investment banking and investment management operations in the United States, will also provide advisory services to Johnson's firm.

Johnson said he and Deutsche Bank began talking about a deal after Deutsche Asset Management representatives tried to enroll him as a client for their wealth management service. H. Van Sinclair, president of RLJ Cos. of Bethesda, which has been the conduit for Johnson's growing stable of businesses, then began a series of meetings with Deutsche Bank officials, including Kevin Parker, head of the bank's asset management group.

"I told them, 'It'd be great to have you manage my money, but while we're at it let's talk about something much bigger,' " Johnson said. Johnson's net worth, according to Forbes magazine in 2003, is around $1.3 billion.

The presence of Deutsche Bank could lighten a burden that all brand-new institutional money managers face: a lack of track record. Three years of operation and at least $2 billion of assets under management is seen as the starting point to be considered by most institutional investors.

However, most public pension funds have at least informal programs designed to find "emerging managers," usually small or minority-owned firms that would not typically be considered.

While there are few black money managers in the hedge fund industry, pension funds have in recent years sought to increase the diversity of their money manager base.

"The fact is there is no strong, leading African-American-owned player in this space," Johnson said. "A lot of state pension fund money comes from a growing class of African American and minority workers. And that money is all managed by others, by professionals. I think we can make the case that we have the talent, the skills and the strategic partnership to be a major player in that professional community. It's the same case I made in the cable industry."

Earlier this month the board of the California Public Employees Retirement System, or Calpers, the largest public pension system in the United States, conducted a conference aimed at increasing the diversity of the managers it hires to invest the retirement savings of its 1.4 million members, said Brad Pacheco, a Calpers spokesman.

"Our board recognizes that diversity in our investment portfolio managers is important," Pacheco said.