The decision by Citigroup Inc. to take a stake in the department store chain La Curacao underscores the eagerness with which large banks want to extend credit to undocumented and un-banked Hispanics.
La Curacao’s flagship sits on Olympic Boulevard, just outside of downtown L.A. Through its six locations, the chain sells electronics and furniture to Spanish-speaking customers and offers credit cards, long distance telephone and Internet services.
Citigroup’s venture capital division took a 10.5 percent stake in La Curacao for an undisclosed sum. Estimates put La Curacao’s annual revenues at about $250 million.
“Citigroup is interested in the Hispanic population and how we are tackling it,” said Mauricio Fux, senior vice president of La Curacao. “They’re interested in both aspects of our company, the retail as well as the financial side.” (Citigroup venture unit official declined comment.
The retail chain is willing to extend credit cards to immigrants with no credit history and limited documentation. Its financial services division has issued more than 1 million credit accounts and charges a 23.99 percent interest rate. That’s a bit higher than the typical department store credit card, but can lay the foundation of a credit history that could lead to approval for auto or home loans.
The company was founded in 1981 by two Israeli immigrants, Jerry and Ron Azarkman, and is owned by their holding company, Adir International. The company owns the Pollo Campero chicken restaurant chain.
La Curacao also runs a distribution unit where customers in the U.S. can buy merchandise for relatives in Latin America and La Curacao will deliver it. Fux said most of the revenues come from the retail and credit-card business, which is what interests Citigroup most.