Black-led investment fund Apis & Heritage (A&H) Capital closes its flagship Legacy Fund I at $58.1 million, helping low income workers and workers of color to become owners/operators of great businesses, creating broad based wealth for workforces across AmericaWASHINGTON, Dec. 22, 2022 /PRNewswire/ -- Apis & Heritage Capital Partners (A&H), an investment fund that finances the conversion of companies with substantial Black and Brown workforces into 100% employee-owned businesses using a 100% ESOP structure, today announced the final close of its first investment fund at $58.1 million, surpassing its initial cap of $50 million. A&H Legacy Fund I is now closed to new investors.Black-led investment fund Apis & Heritage (A&H) Capital closes its flagship Legacy Fund I at $58.1 million."The whole A&H team is humbled by the outpouring of interest and support from the investment community for our novel approach," said Todd Leverette, A&H Founding Partner.
"We are trying to create a better path for employees, especially workers of color, to gain from their own hard work and innovation, while also building great small companies into great bigger companies. We are deeply grateful to our institutional investors and individuals for believing in our team and our model, and are only sorry that we could not accommodate every investor who wanted to be a part of Legacy Fund I.""Our value-proposition has been well received by business owners," added Phil Reeves, A&H Founding Partner. "With two transactions under our belt, we have two founders/sellers who are proud of the legacy they are creating for their community and their workers by transitioning their companies into 100% employee-owned businesses through the auspices, capital and guidance of A&H." (See here for background on A&H's first two transactions.) "Since we focus on enterprises that have a large number of low income workers and workers of color, we know we are going to make capitalism start working for people who have been denied these opportunities for so long.
You might say A&H aims to put the "equity" back in private equity."A&H searches for businesses with large workforces of color where the owner is ready to sell and retire. A&H negotiates a fair price for the business and then provides financing and technical support to convert the companies into 100% employee-owned businesses. A&H's novel "employee-led buyout" (ELBO©) model helps workers build wealth through ownership, especially Black and Brown workers who have historically been left out of such opportunities.
Today, over 40% of all Americans surveyed by the Federal Reserve report they could not easily pay an unexpected $400 medical bill, while about 2/3 of Black and Latino workers retire with zero savings after a lifetime of work. In contrast, the average employee in an employee-owned business nearing retirement has $147,000 in his or her ESOP account, which they have not bought but rather earned from their hard work. A&H and its investors believe this can be transformative for low income US workers, their families, and their communities.
A&H's novel ELBO© approach also solves critical problems with the traditional owner-financed ESOP transaction model. A&H's financing structure means the seller is paid at least 90% of the enterprise value on Day One, rather than over a decade, and A&H also coordinates the legal and regulatory paperwork of an ESOP transaction along with much of the cost. After transition, A&H serves on the Company's board, brings resources and advice to management, and helps train the workforce and management about what it means to be employee-owners.
"We are trying to make it easy for owners to sell their great companies to their workers and assure those companies will stay rooted in their communities and grow over time," said Michael Brownrigg, A&H co-founder.A&H's Legacy Fund I investor base includes The Rockefeller Foundation's Zero Gap Fund, The Ford Foundation, The W. K. Kellogg Foundation, The Skoll Foundation, Gary Community Ventures, The Robert Wood Johnson Foundation, Fresh Pond Capital and Reynders, McVeigh Capital Management, Spring Point Partners, Sorenson Impact Foundation, Candide Group, Ascension Investment Management, Veris Wealth Partners, Social Capital Partners (Toronto), Tiedemann Advisors, Kachuwa Impact Fund, Franciscan Sisters of Perpetual Adoration, Kendeda Fund, World Education Services, The Libra Foundation, Realize Impact, Opus Foundation, Mary Reynolds Babcock Foundation, the Cooperative Assistance Fund, and numerous individual investors who care about the future of our country.A&H has engaged HC Global Fund Services to act as the fund's administrator.
HC Global has created the financial infrastructure for A&H and has been a true partner in launching the fund. "Apis & Heritage has always been more than a client to us. We are delighted to be the tail-wind and support for the A&H team, who are making a real difference," said Ghufran Rizvi, COO, HC Global.About Apis & Heritage CapitalApis & Heritage Capital uses a novel "employee-led buyout" (ELBO©) structure to provide workers in essential industries with the most powerful wealth building tool in the nation: equity in a thriving business.
A&H finances the acquisition of great companies from retiring owners/founders and converts them into 100% employee-owned enterprises. Because A&H is dedicated to closing the racial wealth gap, it searches for companies that have large workforces of color and low so that the benefits of ownership will be broadly realized. A&H's ELBO© structure utilizes an employee stock ownership plan (ESOP) model for employee ownership, which has over 50 years of bipartisan political and regulatory support. A&H works with some of America's most forward-thinking lending institutions to provide senior loans as part of each LINK A&H and its workforce training partner, the nonprofit Democracy at Work Institute (DAWI), build an ownership culture in each company that ensures all employee-owners, from management to the shop floor, are engaged in a common endeavor to create healthy, growing, profitable, and satisfying places to work over the long term.
A&H's founding team members are Todd Leverette, Philip Reeves, Michael Brownrigg, Natalie Edwards, Jason Ollison and Kyle Chin-How. A&H, which is minority-owned, was incubated at DAWI with seed funding provided by the Kendeda Fund, The W.K. Kellogg Foundation, and support from Citi Community Development.
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