Private equity says 'hola' to Latino firms

•Promérica Bank, a small community bank founded two years ago by Maria Contreras-Sweet, former head of several California state agencies and a Mexican immigrant who saw an urgent need for a Latino-owned bank in Los Angeles.

Promérica has only $70 million in assets, but it is growing quickly. The bank's cultural closeness to Latinos gives it an edge. For one, Promérica offers financial classes in a large room with a kitchen, because Hispanics "feel more comfortable sitting around a table talking, having a little food and feeling like family," says Contreras-Sweet.

Like Bank of America, which began as the Bank of Italy in San Francisco a century ago, Promérica hopes to broaden its appeal to small businesses owned by all minorities, as well as those owned by women.

"Whether Latino or Italian or Indian," says Contreras-Sweet, "we want to make sure they fulfill their potential for economic success."

A national market

In years past, the Hispanic market existed mainly in big cities. Now, Nusbaum says, the Latino population explosion has led businesses to develop national strategies.

Palladium invests $5 million to $100 million in promising businesses, typically acquiring large stakes, joining boards and carrying out restructurings and buyouts. The privately held firm doesn't disclose the investment performance of its two funds, which have assets of $1 billion. Rodriguez says the funds are growing and doing well, even during the economic slowdown.

Palladium has attracted large investors and pension funds, including Spanish bank BBVA, California State Teachers' Retirement System (Calstrs) and California Public Employees' Retirement System (Calpers).

Hispanic consumers will have as great an impact on the U.S. economy as Baby Boomers now and European immigrants in the last century, says Calstrs Chief Investment Officer Chris Ailman. Calstrs, which has $160 billion in assets, has committed $40 million to Palladium. "This will continue to be a very strong, long-term trend and investment theme," Ailman says.

For Rodriguez, it was only a matter of time before the Latino market took off. He noticed it on Wall Street as he researched Hispanic companies. He glimpsed it in Mexico's Rio Grande Valley, where the economy was starting to boom. And he recalls it as a kid in New York, where Latino businesses have thrived for years.

"You don't need to convince most people now that there are investment opportunities out there," Rodriguez says. "You can walk down the street and see it."

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