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Macellum launches private equity firm focused on Black and minority-owned businesses

Macellum Capital Management CEO Jonathan Duskin and Macellum Private Capital Managing Partner Daniel Balzora join Yahoo Finance Live to discuss the company's new private capital firm that will focus on Black and minority-owned businesses.

Video Transcript

BRIAN SOZZI: The activist hedge fund trying to shake up sleepy Kohl's is out with a new initiative today. Macellum Capital Management is launching a private capital arm of its business dedicated to investing in Black and minority-owned or led businesses in the consumer and retail industry. The investment firm is targeting a capital raise for this new arm of $200 million. Joining us now is Macellum Capital Management CEO Jonathan Duskin and Macellum private capital managing partner Daniel Basura. Good morning to you both. Jonathan, I'll start with you. What made you launch this?

JONATHAN DUSKIN: Well, Brian, first, I appreciate you having us on. Look, we-- it's really two parts. I think this initiative is long overdue. And we think it's a tremendous-- it's just a huge opportunity. It's an untapped opportunity. We think that there's over a trillion dollars of potential of business that could be garnered. And we think that looking at minority-owned businesses that have been starved for capital, starved for resources, starved for expertise, I think we are uniquely positioned with our strategic partners with G3 and Citi Trends and Bob Johnson. I think we're uniquely positioned to identify these companies and invest in them and help them grow.

And like I said at the onset, I think this is something that's long overdue. The country is really clamoring for more African-American and minority-owned brands. The retailers, as I'm sure you know, Brian, many have taken this 15% pledge and want to buy 15% of their goods from African-American and minority-owned businesses. And so we're here to help. We're here to find these companies. We're here to invest in these companies. We're here to grow these companies.

BRIAN SOZZI: Daniel, over to you, how do you find these companies? And what are some of the qualifications you're looking for?

DANIEL BALZORA: Yeah, thanks for having me. We're going to find these companies based on getting them out there, so folks understand that we're here as a strategic resource, capital provider, and a trusted partner. And that's our investment model and investment thesis and style. And among our network, our relationships that Jon mentioned, and again, our experience in this business for over 20 years, you know, that's how we'll attract great talent, great companies, and high quality management teams.

JULIE HYMAN: And Daniel, I kind of want to follow up on that because in talking to a lot of venture capital folks, part of the issue historically seemed to be that you don't see a lot of people of color, women, other minorities in the check writing seat, if you will. And so I'm curious as well, as a person of color who's in that role, how you can improve that network, right? How you can use that network that you're talking about to make these sorts of connections.

DANIEL BALZORA: Yeah, that's a great point. Not only are the amounts of companies that are minority-owned very low, the proportion to the US population and to companies in general, but the proportion of diverse-owned investment firms is very low. And so part of our goal here is to increase those percentages. And the way to do that is to align ourselves with like-minded investors and other diverse-owned investment firms across all stages to partner up, share ideas, share networks, things of that nature. So it's a lot of steps to take to get there, but I think if we see ourselves as partners and our competitors with the goal of backing these companies with strategic resources, we can lift those percentages on both sides.

BRIAN SOZZI: Daniel, how long do you think it will take to raise that 200 million? Have you been out there pounding the pavement yet?

DANIEL BALZORA: We've been talking to a few potential investors at this point. So it'll be between nine months to a year or so. Don't hold me to that, but that's an estimate at this point. But, you know, right now, what we're focused on is continuing to build a firm as far as the back office and our investment team, align ourselves with our strategic relationships, and find great companies.

BRIAN SOZZI: Jonathan, over to you. I was thinking before this segment started that I perhaps talked to you more in the past three months than I've talked to my own family. And that is, in fact, very true, on all things Kohl's, of course. What's your current thinking on Kohl's?

JONATHAN DUSKIN: Well, Brian, I'm sure you've read all the media, as we have. It seems very clearly that the number of bidders who have made it to the next stage on Kohl's-- you know, I think they reported, I think it was Monday that several bidders passed the first stage and on to the second stage. I think it was also reported in numerous outlets that the company was adamant that the prices need to be in the 70s, start with a 7 for people to proceed to the next level. So it would appear that a number of bidders have gotten to that point. And we are running full steam.

It's important, I think, that we keep the pressure on them to make sure that they do conduct this process in a full and fair and transparent manner. So we're still going ahead with our strategy to run a control slate. And I really think the company has two avenues. One, sell the business, and two, go to a contested election, and obviously, we don't think they'll fare very well there. We think the case for change is pretty compelling, particularly if they don't accept one of these offers in the 70s that would be a material premium to the unaffected unadjusted price of $46.

BRIAN SOZZI: Do you think Kohl's is sold before the annual meeting?

JONATHAN DUSKIN: It's an interesting question. It's a bit of a puzzle with a lot of moving pieces, I guess. I think from our perspective, we won't be satisfied with anything less than. The board has approved a deal, and they're awaiting shareholder vote, and that the annual AGM becomes a vote on the deal that the board has already approved. Anything short of that, we will continue to run our campaign for change at the majority of the board.

BRIAN SOZZI: Well, good luck in your endeavors, and very good to see this latest initiative. Jonathan Duskin, CEO of Macellum Capital Management, and chairman of investment committee at Macellum Capital-- Private Capital, Daniel Balzora, good to see you guys. We'll talk to you soon.