Today Mr. Bron, formerly a senior executive of the now-defunct Drexel Burnham Lambert, reports he is trying to raise $300 million from investors for another round of investments.
Overall, the success of Mr. Bron and other Hispanic-owned PE firms that are positioning themselves to invest public funds in the Hispanic market – such as Nogales Investors and Palladium Equity Partners, which recently secured a commitment from CalPERS for $25 million, and Hispania Capital Partners, a Small Business Investment Company (SBIC)-licensed PE firm – only begin to scratch the surface of the potential investment opportunities.
One entity intent on making this case is the New America Alliance, an organization of Hispanic enterprise leaders. Its pension fund committee manages collaboration with state pension funds and legislators to "encourage and support their investments in PE funds that are controlled by Latino general partners and focus investment in Latino businesses."
Additionally, Hispanic Business's CEO Round-table on Capital Markets – part of our November 2005 EOY (Entrepreneur of the Year) Awards event in Los Angeles – will discuss capital trends and strategies for attracting investment and lending flows to U.S. Hispanic enterprise markets.
When Legislators Talk Tough
Encouraged by state legislators and others who are demanding to know why PPF assets haven't found their way to a more diverse stable of managers, a handful of the country's largest funds are being more aggressive about spreading the wealth. In California and Illinois, lawmakers have bottled up legislation until the pension systems deliver firmer strategies for shoring up minority participation.
The pressure has pushed some pension funds to put more emphasis on strategies aimed at "emerging managers and firms," an industry term used to refer to non-traditional firms. But that's not good enough for Illinois State Senator Iris Martínez. As chair of the pensions and investments committee of the Illinois General Assembly, she wants PPFs to find more minority- and female-owned firms at all levels. "I don't want minority firms to compete with each other over the little thrown our way," she says.
Her stance regarding legislation sought by pension funds is: "Do the right thing and you'll have me behind you in moving 100 percent of these bills." Or "Disrespect me and this committee, and you won't get anything moved." It's that kind of frank talk that has some fund trustees and others paying attention.
But even in Illinois, with more than $120 billion in PPF assets, the focus so far has been on minimum allocations to Hispanic-owned asset management firms – not to Hispanic PE firms and investments in the growth of Hispanic-owned enterprises.
At the forefront so far are funds in two of the nation's largest states:
n California's CalPERS and California State Teachers' Retirement System (CalSTRS) funds, with $196 billion and $130 billion in assets, respectively; and
n New York City's five major PPFs, with a collective $85 billion in assets.
"We think new ideas and new approaches are always being developed, and they don't always come from main Wall Street firms," observes Fred Buenrostro, CEO of CalPERS. Currently CalPERS has some $22 billion committed to the Alternative Investment Management Program, or PE, asset class; and of this only $50 million is allocated to two Hispanic-owned PE firms. (See table "CalPERS Investment in Hispanic-Owned Alternative Investment Management Programs.")
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