News Column

Capital, the New Priority

March 2006, Hispanic Business Magazine

Jesús Chavarría

Invest

Since 2004, the March issue of Hispanic Business has focused the journalistic microscope on the topic of wealth creation for entrepreneurs. The examination continues in this issue with coverage of the magazine's CEO Capital Markets Roundtable and a look at various models for channeling equity capital to middle-market companies. Driving the attention is an emerging consensus that access to capital has become the top priority in the U.S. Hispanic economy.

Plenty of data point to this conclusion, but for real world experience, consider the diverging fortunes of the Hispanic Business 500®. An analysis in the June 2005issue reports that the 25 largest companies on the directory accounted for nearly 90 percent of the growth in revenues. A large proportion of the other 475companies had stagnant sales or marginal increases.

The U.S. Hispanic economy has reached the stage where the big get bigger, and the smaller tread water. Note that these aren't mom-and-pop operations – some of those 475 companies report sales of $100 million or more – but they fall in the lower end of the middle market.

That's exactly where private equity and mezzanine debt should enter the picture, to finance growth among these companies. The historical barriers that prevented or limited Hispanics from owning businesses have largely been overcome. The battle for equality in the 21st century has moved to the question of parity in accessing growth capital.

But wealth creation in the Hispanic market involves more than business finance. In fact, studies show that development of personal investment wealth often precedes the launch of an entrepreneurial venture. That's why stories in this issue discuss real estate, a method of wealth creation favored by Hispanics, as well as the traditional capital markets of stocks and bonds.

Today's wealth-conscious Hispanics have more corporate leaders behind them than ever before. Articles in this issue feature names like Merrill Lynch, AXA Advisors, Liberty Mutual, Ramirez & Co., Hispania Capital Partners, Palladium Equity Partners, Nogales Investors, Verizon, Chase, Wells Fargo, Washington Mutual, Citibank, and LaSalle Bank. Ten years ago – or even five – the list was much shorter, and some of the names didn't exist. The interest of the finance industry in the Hispanic market bodes well for Hispanic investors, financiers, and entrepreneurs.

Experts both at the CEO Roundtable and quoted in this issue point to a lack of data about the Hispanic market as an obstacle to capital and wealth creation. Hispanic Business plans to keep the microscope focused on the topics of wealth creation and entrepreneurial growth financing until we find solutions for our readers.



Source: HISPANIC BUSINESS Magazine


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