"Deal flow" is how investment bankers measure the volume of opportunities for matching businesses with equity capital. And right now, the deal flow in the U.S. Hispanic market is very healthy.
"The deal flow that we are experiencing is extremely good," says Carlos Signoret, co-manager of the Hispania Capital Partners fund in Chicago. "Compared to the dot-com environment in 1999 to 2000, it's different. Then you had deals coming down the pipeline that were Internet-related and many were start-ups. Now the volume is comparable to back then, but it's varied in terms of size and sector and maturity of business."
Juan Carlos "Jay" Garcia, managing director and head of global research at Samuel A. Ramirez & Co. in New York, says in today's environment good ideas will get funded more likely than not. "That wasn't true a generation ago, but it is today. People are seeking Hispanic companies to invest in."
Investors often go the private-equity route because of limited public opportunities in the Hispanic market, according to Mr. Garcia. At one point, Ramirez & Co. tried to identify public companies that were either 51 percent Hispanic-owned or derived 51 percent of their revenue from the Hispanic market. The project yielded only 20 such firms.
"If you ask any asset manager, he'll tell you that a 20-company universe is not enough to build a fund around," says Mr. Garcia. "Having said that, they take a look because these companies grow much faster than the average in Corporate America." In fact, an index based on the most-liquid Hispanic stocks has grown in value by 150 percent since August 2000, while the Dow Jones and Standard & Poor's indices have lost money, according to Mr. Garcia.
Funds or corporations with a strategic interest in the Hispanic market also prefer equity deals. And increasingly, these investors are coming from other Hispanic countries. Recent deals include investments by Spain's Marco Polo fund in film distributor Arenas Entertainment (see Hispanic Business, March 2004), and Spain's Recoletos in newspaper publisher Mexicamerica Media. Also, Mexico's Televisa is interested in buying U.S. Hispanic media properties.
"With the Hispanic market, you get the fast growth without the risk usually associated with [Latin America]. You're seeing that more and more," says Thomas Castro, CEO of Border Media Partners, a radio broadcaster that recently received $85 million in equity and debt financing, in part from Mexican investors, Vestar Capital Partners, and Spanish bank BBVA.
Experts say hot industries for investors today include media, banking, health care, and food. "Any company providing services to the Hispanic market – be it customers, businesses, finance, or distribution – is attractive," says Mr. Signoret.
|Select M&A Deals in the Hispanic Market|
|The Washington Post||El Tiempo Latino||Media||Acquisition|
|Atlanta Journal-Constitution||Mundo Hispanico
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