Allstate Corp. hired solely banks owned by minorities, women or veterans for its bond sale, in the biggest corporate deal yet managed only by diverse firms.

The insurer enlisted Loop Capital Markets, Academy Securities, Samuel A. Ramirez & Co., Siebert Williams Shank & Co., AmeriVet Securities, Cabrera Capital Markets, C.L. King & Associates, Penserra Securities and R. Seelaus & Co. to underwrite its debt offering, according to a filing. Allstate also said it’s committing to doubling trading volume with diverse firms next year for its $92 billion investment portfolio, according to a statement Thursday.

Companies typically work with large banks like JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc., which lend to corporations for small fees in the hopes of winning more lucrative capital markets business. Diverse firms, which are mostly structured as boutique investment banks, usually have smaller roles on bond deals with less responsibility for allocations.

But the Allstate transaction marks the first of substantial size that diverse underwriters are leading without any bulge-bracket banks, according to data compiled by Bloomberg and people with knowledge of the matter. It borrowed $1.2 billion to help fund the $4 billion acquisition of National General Holdings Corp., the auto insurer’s largest takeover ever.

“You can’t gain experience unless you actually get an opportunity,” said Sidney Dillard, head of corporate investment banking at minority-owned Loop. “It gives credibility to the capabilities of our firms, and starts to move the needle on the traditional construct on Wall Street of who are the firms that can actually do these deals. It will get us more into the mix.”

When initially planning for the offering, Allstate Chief Executive Officer Tom Wilson met with his financial chief, who mentioned that there were going to be more diverse firms in the process. Both concluded that they could ramp up that commitment and make the syndicate composed of all diverse underwriters, Wilson said in a phone interview. By the end, both of the portions received twice as many orders as bonds available for sale, according to data compiled by Bloomberg.

“We always knew they could pull it off and they did,” Wilson said. “What we’re hoping is that this shows other people that it can be done.”

Breaking Through

Allstate routinely works with large Wall Street firms and has a credit facility that includes major lenders like JPMorgan, Wells Fargo & Co. and Bank of America, among others. Wilson said he ended up reaching out to leaders of many Wall Street institutions including Bank of America’s Brian Moynihan to talk about how the insurer wants this to become a more sustainable trend that spreads beyond Allstate.

“Nobody was trying to sell against them,” Wilson said in an interview when asked if it changes Allstate’s relationship with the big Wall Street firms. Leaders he spoke to were encouraging, he said.

Diverse firms are making more progress in the corporate bond market in 2020 amid a social reckoning on racial issues, which has in turn benefited banks owned by minorities, women and veterans. They’re also getting more business in what’s been a record year for corporate debt issuance, and increasingly taking on more significant roles.

Citigroup Deal

Citigroup worked exclusively with women, veteran and minority-owned broker-dealers on a recent $2.5 billion offering to expand affordable housing, while Verizon Communications Inc. tapped some of the same firms to lead its green bond offering in September.

Unlike the corporate bond market, municipalities have long entrusted diverse firms to lead their debt sales, putting firms like Siebert, Ramirez and Loop in the top 20 of negotiated municipal bond managers. In the U.S. investment-grade corporate market, Loop is the only diverse bank in the top 40, according to data compiled by Bloomberg.

“I think other industries can do this,” Wilson said. “Let’s call into question why we are where we are and what could we do to change it, so we are where we want to be.”

–With assistance from Andrea Niper, Daniel Covello, Danielle Moran, Rebecca Sgrignuoli and Brian Smith.

Top Photo: Allstate Corp. signage stands on display outside the company’s headquarters in Northbrook, Illinois, U.S., on Tuesday, Jan. 21, 2020. Photographer: Christopher Dilts/Bloomberg