Rustic Canyon / Fontis Partners Closes Initial $70 Million to Fund Investment in Emerging Ethnic Markets; Fund Will Emphasize Southwestern Hispanic Markets

Business Wire, Dec 16, 2005

LOS ANGELES -- Rustic Canyon / Fontis Partners, LP, a company organized to invest in high-growth segments of emerging domestic markets, today announced an initial close of $70 million as part of its plan to raise a total of $150 million in financing. The fund will place particular emphasis on companies serving the growing Hispanic and Asian markets in the Western United States, focusing on the region's fastest-growing business segments: minority- and women-owned businesses. Initial investors include CalPERS, the Banc of America California Community Venture Fund, CalSTRS/Banc of America Capital Access Fund, The New Mexico State Investment Council and Wells Fargo Bank.

A major shift in demographics is taking place in the Western United States and across the nation. In California, the 2000 census showed that ethnic minorities now comprise the majority of the population. Across the United States, the Hispanic population is now greater than all but eleven other countries in the rest of the world. Furthermore, the Western region represents over 25 percent of all United States businesses with 50-1,000 employees. Companies in the region are growing at a rate over three times higher than the national average.

"Despite the strong demographics and growth among ethnic communities in the Western United States, we believe that the market remains underserved by the private equity industry, particularly with regard to later-stage investing," said Daniel D. Villanueva, a member of the Fund's General Partner, a founding member of Univision and a pioneer in Hispanic private equity. "We believe that the enormous -- and increasing -- buying power of ethnic communities represents a growing sphere of opportunity for business and for the investment community."

Market segments on which Rustic Canyon / Fontis Partners, LP will focus include ethnic media, consumer goods (including foods and health and beauty aids) and financial, information and business services. The fund will provide growth capital to cash-flow positive companies with annual sales ranging from $10 to $70MM, in both control and non-control transactions.

The partners of the Fund are Daniel D. Villanueva, Gabrielle Greene and Daniel L. Villanueva, and Rustic Canyon Partners (www.rusticcanyon.com). Rustic Canyon Partners is a leading investment firm that invests in a range of sectors, including software and IT infrastructure, internet businesses, business and information services, media, and efficient energy. Rustic Canyon's Managing Partner, Tom Unterman, and a senior partner, Renee LaBran, along with Messrs. Villanueva and Ms. Greene, serve as the Fund's principals and on the Fund's investment committee.

"There is no question that the Hispanic market is now a driving force in the national economic landscape," said Stephen Palacios, executive vice president at Cheskin (www.cheskin.com) and an expert on Hispanic marketing. "With the growing interaction between cultures comes new economic needs and new business potential. Those who can understand, serve and invest in this market will be well positioned to reap the benefits in the decades ahead."