Exciting Black success in the 1980s drove David Grain to build his own firm managing $9 billion in assets

BY Preta Peace Namasaba March 27, 2024 11:12 AM EDT
David Grain. Photo credit: Grain Management

Inspiring others is mostly about possibility – showing them that what they thought was unattainable, or had never dared to dream of or expect, can be achieved. It is also about change, conveying an optimistic vision of the future and driving development and growth. Inspiration can come from both the people we know or don’t know. For David Grain, seeing the success of other African-American entrepreneurs inspired him to what was possible. His telecommunications investment firm Grain Management is one of the biggest in the world with $9 billion in assets under management.

Grain learned his first lessons in entrepreneurship watching his father build a thriving business. The youngest of seven children, he inherited his parents’ hardworking spirit. His father worked a series of odd jobs to make it when he was younger, picking up work for the Prohibition Department and later the U.S. Post Office. Grain’s father was always looking for an opportunity to do a little bit better and eventually started a trucking business in midtown Manhattan during the 1940s. He grew the small business, delivering postage as there were no mail rooms into a sustainable venture for more than 30 years. Grain entered college knowing that he too could excel at entrepreneurship.

“Since I was the youngest of seven, I was around the most as my dad’s business was beginning to scale, shares Grain. He was constantly on the search for growth and greater opportunities, and it was fascinating to see how he took advantage of whatever the marketplace offered him. That was when entrepreneurship became really intriguing to me,” Grain said of his business inspiration.

He attended College of the Holy Cross where he played football and rugby and ran track. Having earned his bachelor’s, Grain turned his attention to Wall Street. He completed a summer associate position at Drexel where he worked in municipal finance. Along the way, he became increasingly interested in the acquisitions and takeover activity of the day and knew an MBA would help him make that transition. Grain consequently enrolled for his master’s degree from the Amos Tuck School of Business at Dartmouth College. Meanwhile, he was closely following the career of Chris Williams, a rising star on Wall Street who would go on to launch his own investment firm.

In 1987, Grain opened a newspaper to a report that Reginald Lewis had purchased Beatrice Foods’ international division for $985 million. It was the largest leveraged buyout in U.S. history at the time. Grain was irrevocably inspired when he turned to the full article and saw Lewis, a Black man, staring back at him. Seeing that image, and the success of other African American entrepreneurs, like Williams, raised his sights even more to what was possible.

Following his MBA, Grain rejoined Drexel and learned a lot about the capital formation process that accompanies large-scale M&A transactions within a short time. He went on to work at Kidder Peabody for a while when Drexel filed for bankruptcy in 1990. Grain was soon recruited to Morgan Stanley where he worked in several areas including M&A and corporate finance, ultimately serving as an Executive Director in the High Yield Finance Department. He came across a prospectus for a cell tower company while still with the money management firm and saw a terrific business model with clear growth and operating leverage. Grain pitched his idea to AT&T, which ultimately fell through when AT&T spun off its wireless business.

He soon joined AT&T Broadband as SVP of the Northeast Region and was able to gain critical operating experience for his future business. In the same month that AT&T Broadband was sold to Comcast, Grain was approached by a friend and former client to lead the turnaround of Pinnacle Towers,  a portfolio company of Fortress Investment Group. He led the company (later renamed Global Signal) from bankruptcy to a successful IPO within four years, transforming it into one of the largest independent wireless communication tower companies in the world. Grain now had the credibility and the capital to realize his entrepreneurial dream.

In 2007, Grain founded Grain Management, a private investment firm with a focus on global broadband technology and telecommunications assets.  The company mainly acquires hard assets such as Federal Communications Commission licenses, fiber networks, wireless spectrum licenses, and cell towers and companies with inflation-protected revenue streams and sustainable cash flows that are uncorrelated to market cycles in secondary markets. It targets tier two and tier three markets,  recognizes the outperformance of regional players in the realm of fiber networks and data centers, and leverages its agility against larger competitors that are often overshadowed in the market.

Grain is reaping big from its specialization in the telecom industry. The federal government has spent more than $150 billion on digital infrastructure since 2009. The Infrastructure Investment Bill and American Jobs Act passed in 2021 solely dedicate $65 billion for broadband funding. Driven by data explosion, AI, and an expected rise in global mobile data consumption by 2030, Grain Management will be key in deploying $6-10 trillion for network improvements in the next decade. Grain has grown the firm’s assets under management from $359 million in 2012 to over $9 billion today.

“If you are pushing hard and facing an unusual amount of resistance, it’s probably not ‘go time’ yet, says Grain. You have to be patient and wait for your pitch to swing at,” Grain advised.