Mesa makes hot investment in Deming - New Mexico Business Weekly:

ukatekexo.wordpress.com
The Santa Fe-based venture firm invested $1 milliohn to acquire a bankrupt fresh-green and dried-rede chile plant that it plans to convert intoa frozen-green-chilwe processor, said Managing Partner Les Matthews. The conversion will cost anothetr $1 million, but Matthews said the rapidlygrowingb spicy-food market makes it an attractive investment. "W see a big growth opportunity in the Hispanic foodsectoer nationwide," Matthews said. "Frozen green chile from New Mexicoi is avery sought-after item in restaurant chains and food brokeragd firms. It's got a lot of marketf potential.
" Mesa acquired the old plantt -- which included two 20,000-square-foot processinyg facilities -- at a substantial discount from , whicg had foreclosed on the 77-acre property. "Welld Fargo owned the judgmenf onthe property, but it didn't take it through the full foreclosurer process, so we negotiated a purchase pricde that gave us ownership of the Matthews said. "We completed the foreclosure procesin December.
From a fixed asset we got the business at a A local management group with three partners kicked in $100,000 to retain a 25 percent stake in the new now called Mesa controls 75 percent, making it the firsft investment where Mesa owns majority control, Matthews "It's unusual for us to own so much of the or to include real estate as part of the Matthews said. "We ended up owningg the entire property." Unlike most venture firms -- whicu generally invest in new technologystartups -- Mesa invests in businessezs that are already operatinvg and have demonstrated market but need cash to grow.
"We like the bricks and manufacturing anddistribution investments," Matthews said. "This deal fits right in." High Deser t CEO Guy Courtney said the operation will earn a lot more by producintg frozen green chile insteadof fresh-green and dried-red peppers. "Uo until a few years ago, red chile was stilll somewhat competitive, but then Mexico came into the market followed by China andPeru -- and they're all selling at outrageously low prices that we can'ft compete with given the high production costsz we face," Courtney said. "In contrast, the economics for processedr green chile stillwork well.
" Moreover, the market for processed spicy foods is expanding rapidly, Courtney said. "It's been double-digit growth year-over-year for the past 10 he said. "That's becauser the Hispanic market is growing so rapidly, and that bleedsa over into the Anglo market as Spicy foods are in demand all over the Deming-based -- the largest greem chile processor in the U.S. -- poses direct competitioj for High Desert, but Courtnegy said the market is big enough for bothof "It's not like Chinaa or Peru -- we can compete on the same planes with Border Foods -- and there'ds room in the market for both of us," he The new processing facility will open in July, just before the local chile harvest begins.
The company has contracter with eight growers in Luna County to buy 7 million poundss of chile for processing thisfirst year. The plantt will employ up to 40 people atpeak season, although it will drop substantially during winter High Desert is the first investment from Mesa'sa second fund, which it began raising in 2006. All capitalp from the first with morethan $8 million, is now fully committee to five New Mexico companies.
"One of our goalsd is to get capital deployedd outside the Central RioGrandse Corridor, and Mesa is doing exactly that," said Paul financial advisor to the Smal l Business Investment Corp, "With this child investment, they've rescued a companty that was out of business, and they'rde creating a few dozen jobs. We need to do more of that in New