• $20 million to Panacos Pharmaceuticals Inc., a biopharmaceutical company developing antiviral and HIV therapies;
• $22 million in debt financing to Tectura, a later-stage global provider of Microsoft integrated business solutions; and
• $22.5 million in debt financing to Ikano Communications, Inc., a late-stage company that provides private-label, wholesale and retail Internet services.
Preparing for Down Markets
Institutional investors seem to be anticipating down times for privately owned businesses due to the turmoil in the credit markets. Private equity funds focusing on distressed investment opportunities grew to $45 billion in 2007 compared with a then-record $16 billion in 2006, according to Dow Jones Private Equity Analyst (DJPEA).
Jennifer Rossa, managing editor of DJPEA, told the San Francisco Business Times in January that private equity investors are positioning themselves to capitalize when overextended companies encounter trouble in the coming months and years. "Oft en, the best opportunity for investors to see sizable returns is when overall market conditions are less favorable," she said.
Palladium Goes for Gold
One of the most active Hispanic owned equity firms in 2007, was Palladium Equity Partners LLC, a Manhattan-based private equity firm with $750 in capital under management. Here is a look at some of the action that took place in the Palladium board rooms this year: The company announced in January that it had completed a $58.3 million recapitalization of Prince Minerals Inc., a leading producer and marketer of specialty mineral products and a subsidiary of Palladium portfolio company Prince Mineral Holdings Corp. The recapitalization, financed by three major financial institutions (not including Palladium), generated a dividend for Palladium and positioned Prince Minerals Inc. for additional growth. Net sales have quadrupled from $23 million since 2003, when Palladium purchased the company, to $110 million in 2006, according to Marcos A. Rodriguez, founder and managing director of Palladium.
"Palladium had a busy and productive 2007," says Mr. Rodriguez. "We closed eight proprietary platform transactions in 2007 across our focus industries, geographies and investment themes."
Among those deals is the acquisition of Castro Cheese Company, a leading manufacturer, marketer, and distributor of Hispanic cheeses and creams. Castro Cheese, located in Houston, markets its products under the "La Vaquita" brand and is the second-largest Hispanic cheese company in that nation, according to Information Resources Inc.
"We continue to see strong deal flow in the Hispanic market, aligned with our investment focus, which includes Hispanic-owned companies and companies targeting Hispanic consumers," Mr. Rodriguez says.
Five out of Palladium's eight transactions are Hispanic market deals, and three of the companies are Hispanic owned.
Palladium has committed to invest as much as $10 million in Starfire Systems Inc., of Malta, New York, a global developer and manufacturer of nanostructured advanced ceramic materials and finished products used for electronics, transportation, aerospace, and other industries.
Other Palladium deals in 2007 included undisclosed investments in Todobebe Inc., a Miami multimedia company focused on Hispanic parenting; Sahale Snacks, a Seattle-based producer of branded and private-label all-natural, gourmet snack food products; and DailyMe Inc., a media company that provides personalized news and information on demand via the Internet.
Overall, 2007 will go down in the books as a healthy one for Hispanic investors and retailers. Some companies, of course, struggled to secure investment, but for the most part, the Hispanic investment sector continues to flex its muscles and grow ever stronger. "We believe strongly that opportunities and investments across the board will continue to increase as Hispanic companies continue to grow and mature," says Palladium's Mr. Rodriguez.
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