Private Equity & Emerging Domestic Markets Presented by Marcos A. Rodriguez, Managing Member, Palladium Equity Partners Diversity Investment Conference: Expanding Investment Opportunities Through Diversity Sponsored by CalPERS & CalSTRS * San Jose, CA * April 24-25, 2006 CONFIDENTIAL This presentation is for the intended recipient only. No portion of it may be distributed or copied.
WHY INVEST IN THE U.S. HISPANIC MARKET? $700B Market Explosive Population Growth 1 of 2 new Americans is Hispanic High Degree of Business Formation 1 of 3 new American businesses is Hispanic Rapid Consumption Growth Consumption growth 75% higher than total U.S. Favorable Age Demographics 20% of Americans under 30 are Hispanic
CORE TARGET MARKETS <ul><ul><li>Companies Selling to U.S. Hispanics </li></ul></ul><ul><ul><li>Companies Leveraging U.S. Hispanic Products and Services into the Mainstream Market </li></ul></ul><ul><ul><li>Hispanic-Owned Companies </li></ul></ul><ul><ul><li>Latin American and European Companies / Management Teams Looking to Enter / Expand U.S. Operations </li></ul></ul>Investment in the U.S. Hispanic market can be focused on four “core target markets”
SIZE OF CORE TARGET MARKETS Core Target Market Estimated at $300 – $350 Billion and Growing at >10% Per Annum
Food and Beverage Expenditures ($Bn) MARKET OPPORTUNITIES Core Target Market 1: Selling to Hispanics Historical and Projected Spanish-Language Ad Spend Source: Hispanic Business Magazine, AHAA, Thomas Wiesel Partners.
$10 Bn Opportunity in Hispanic-Themed Food Products and Restaurants U.S. to Spend $1.3 Bn on Salsa and Tortillas in 2008 Source: Packaged Facts. Source: Technomic. Consumption of Mexican Sauces and Tortillas ($MM) QSR Industry by Segment FOOD OPPORTUNITIES Core Target Market 2: Hispanic Mainstream Mexican QSR: $6.8 Bn; Mexican FSR $1.3 Bn
OVERVIEW OF TOP HISPANIC-OWNED BUSINESSES Hispanic Businesses Have Achieved Substantial Scale and Are Growing Rapidly Revenues Growing Across Size Ranges Average Revenue Grew by 19% from 2003-2004 Employment Increasing Across Size Ranges Substantial Hispanic Activity in Several Industries Source: Hispanic Business Magazine. Top Hispanic-Owned Businesses: Revenue Breakdown Top 500 Hispanic-Owned Businesses: Average Revenue ($MM) Top Hispanic-Owned Businesses: Revenue Breakdown Top 500 Hispanic-Owned Businesses by Industry Core Target Market 3: Hispanic-Owned Businesses
PARTNERSHIPS WITH GLOBAL CORPORATIONS LOOKING TO EXPAND IN U.S. MARKET <ul><li>Investment Opportunities (all targets within the U.S.): </li></ul><ul><ul><li>Global provider of communication services from U.S. to Latin America seeking a strategic and financial partner. Total equity need of $20 million. </li></ul></ul><ul><ul><li>U.S. provider of fresh-cut flowers with South American management team looking for a for a strategic acquisition. Total equity need of $30 million. </li></ul></ul><ul><ul><li>Building products manufacturer lead by South American management team seeking partner in U.S. to purchase largest competitor and expand existing U.S. operations. Total equity need in excess of $40 million. </li></ul></ul><ul><ul><li>European food company seeking a private equity joint venture partner to target the U.S. Hispanic market. Total equity need of $40 million. </li></ul></ul>Excellent Opportunity to Gain Access to Superior Resources and Managers Core Target Market 4: Foreign Partners
PALLADIUM FUND III - $520 Million $520.0 Total Closed/Signed 10.6 GP Commitment 7.5 Chicago Teachers 10.0 JPMorgan Chase 10.0 Citibank 10.0 LACERS 15.0 LA Fire and Police 15.0 Fonditel (Telefonica) 25.0 GE Asset Management 35.0 New York State 47.4 Various Family Offices/Other 50.0 CalSTRS / Bank of America 55.0 New York City 100.0 CalPERS $129.5 BBVA Commitment Institution ($ in millions) Final Closing on March 20, 2006 Palladium Equity Partners III, L.P.