The verdict is now in on how Hispanic-owned companies and those marketing to Hispanic consumers fared in 2007. By most accounts, it was a robust year for many Hispanic markets. A number of successful mergers and acquisitions and increased private equity investments generated a healthy flow of capital, stimulating sectors such as health care, media, food, and technology.
Mergers and acquisitions, while not matching the deal-making exuberance of the 1980s and 1990s, took place at a brisk pace throughout almost all sectors, but the bigger moves were made by private equity firms. Unlike the 1980's, when fewer Hispanic investment companies and brokers took part in the capitalization efforts, many Hispanic-owned private equity firms were involved last year. Four of the larger private equity players were: Hispania Capital Partners, MBF Healthcare Partners LP, Hercules Technology Capital Growth Inc., and Palladium Equity Partners LLC.
Let us look at how they and some of the other Hispanic leaders in the investment and retail fields fared in 2007. Consider this a financial snapshot of the growing Hispanic influence on the American economy.
Investing in Health
"It was a year of acquisitions for us," says Mike Fernandez, chairman of MBF Healthcare Partners in Coral Gables, Florida. The $225 million private equity fund reports annual earnings of between $5 million and $25 million and focuses on health care companies. "We spent about $100 million on a number of transactions (up 50% from previous years), including investments in the two largest Hispanic-owned pharmacy chains in the nation," he says.
One of the chains, Navarro Discount Pharmacies in South Florida, announced a vigorous expansion plan based on the new capital from MBF Healthcare Partners. The family-owned Navarro chain, the largest Hispanic-owned drugstore chain in the United States, plans to open up to five new stores in South Florida every year for the next few years. Navarro has 20 existing stores that capture about a 17% market share in South Florida, with annual sales of about $250 million.
Part of the expansion plan stemmed from a merger between Navarro and Sedano's Pharmacy & Discount Store Inc., another leading Hispanic drug retail company with 11 pharmacies in the South Florida market. The merged entity, with capital from MBF Healthcare Partners, plans to increase its presence throughout the United States.
Health care has been a safe haven for investments, according to Mr. Fernandez. "Health care normally is insulated more in down markets," he says. "We particularly like this sector because health care represents 14%-15% of the GNP consumption. That is expected to increase to 23% over the next 10 years."
Here are some other deals announced by MBF:
• The acquisition of Wren Medical Systems Inc., a Chicagobased distributor of sophisticated nutritional therapy products, by portfolio company Medical Specialties Distributors LLC.
• The purchase of Nutri-Force Nutrition Inc. by portfolio company FDC Vitamins LLC. The move created a fully integrated nutritional company to capitalize on FDC's branded nutritional products.
• MBF's biggest deal, however, may come this year. Although Mr. Fernandez did not disclose the name of the participants, he says MBF plans to purchase a health care company in the $150 million-$500 million range.
• Last year, MBF made some substantial internal moves, announcing the initial public off ering of 18.75 million shares at $8 each and granted underwriters an option to purchase as many as 2.8 million units at a later date, bringing the total raised to $170 million.
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