I have a general belief that the successful Hispanics in this country, for the most part, are still working on their own personal net worth. In that pursuit, there isn't a lot of time or energy to work on someone else's behalf, even if there's a business opportunity. We need our Hispanic business leaders to commit to creating a private equity pool. It could be venture capital, limited partnerships – there are a number of business approaches. But there's a compelling story about the growth of Hispanics in America, and there is a business proposition to be made.
Hispanics show a huge amount of entrepreneurial activity … across almost all business sectors. Many of those start-ups are successful, but they don't get to the second stage or third stage because they don't have the capital, or maybe the know-how to access [capital]. So I see no reason why people who have stature couldn't come together and essentially raise capital the way the majority population does. You go to pension plans and present the story of how to make money, you hire professional management, and you create a deal flow. You'd fish in places that aren't being fished in right now.
For example, BBVA [Banco Bilbao Vizcaya Argentaria], a large Spanish bank that owns Bancomer [in Mexico] announced that they had bought a small bank in California with the idea of cultivating the U.S. Hispanic market. My question is: Why does it take a Spanish bank from the outside to realize this business opportunity? Some of our large banks have programs [to reach Hispanics], but not like this. That's just one example.
HB: Although public markets are considered the prerogative of big companies, the SEC has a Web page for small businesses [www.sec.gov/info/smallbus/qasbsec.htm]. So there is some outreach to small companies that want to go public as their eventual goal. What advice would you give to Hispanic entrepreneurs who would like to go public some day?
Mr. Campos: If you're an entrepreneur, one of the great liquidity events [in your career] is going public. You need to think about it early. Once you decide to position a company to go public, you are accessing public monies, which means you have huge responsibilities to the public in terms of disclosure and following federal securities laws.
So you should prepare your company as much as possible before the event. Have a professional board. Have a board with a majority of independent directors. Put at least one person with financial expertise on the audit committee. Then, first, you become more attractive and a lower risk for outside capital, and second, you won't have a huge [challenge] in changing your culture when you go public. Because these are the rules you'll have to live by.
We now have listing standards that require a majority of outside directors. Our rules directly require the audit committee be composed of independent directors. If you start early, these things won't be as painful or expensive to implement later. Besides, they make a lot of sense.
HB: I know [the SEC] handles the stock markets; does the SEC also handle the bond market?
Mr. Campos: We oversee all securities, which include fixed-income instruments such as bonds and guaranteed loans. The word "security" is interpreted very broadly. If it provides returns, either equity or fixed-income, it's deemed a security subject to our federal laws.
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