Justo Frias, the architect of Mexican retailer Grupo Gigante SA de CV’s ambitious move into California seven years ago, has left the grocery chain to help run a private equity fund aimed at boosting Hispanic businesses.
The fund, with headquarters in New York and a small office in Rancho Santa Margarita near Frias’ home, hopes to raise roughly $225 million from potential investors.
Nexos Capital Partners LLC plans to focus on investments in smaller, established companies owned by Hispanics. Food manufacturers, retailers, staffing companies and others with yearly sales of up to $100 million are targets.
Frias left Santa Ana-based Gigante USA Inc. at the end of 2005.
“I love them and wish them all the darn best,” Frias said of Gigante. “In life, you are dealt a set of cards, and you have to play those cards. Certain circumstances made us take the path we did. That’s the way things happen.”
Frias now is a partner at Nexos Capital.
Nexos plans to invest $10 million to $30 million in companies for three to seven years before seeking a buyer. The firm is looking for companies that are growing on their own or that could expand by acquisitions.
Fund raising for Nexos is expected to last through the year, according to Frias.
Gigante recruited Frias in 1994 to run the company’s operations in Baja California. By the late 1990s, Frias was asked to devise a strategy for expanding in the U.S.
Frias’ departure from Gigante comes at a critical time for the retailer, which is under fire at home from the Mexican operation of Wal-Mart Stores Inc.
Jack Deceliere, a Grupo Gigante executive from Mexico City who replaced Frias as head of the U.S. operation, didn’t return calls for this story.
Frias described Deceliere as a “good man” with roots at Gigante in Mexico City.
Last year, Gigante USA’s nine U.S. stores did $116 million in sales, making up about 4% of the company’s $2.9 billion in sales, according to parent Grupo Gigante.
Operating losses for Gigante USA’s stores were $17 million in 2005, up 70% from $10 million reported in 2004.
Some believe Gigante USA may seek to team with a bigger U.S. retailer as part of a bid to continue expanding,and to make money.
Grupo Gigante cited tough competition in the U.S. as a factor for its losses.
For more on this story, see the April 3 edition of the Business Journal.
