Fund aimed at Cuba investment grows; will list in London
Wed Apr 2, 2008 10:01am EDT
HAVANA, April 2 (Reuters) – CEIBA Investments, a closed-end fund that
invests only in Cuba, plans to list on the London Stock Exchange (AIM)
in June, a sign of growing interest in the socialist state since Fidel
Castro was sidelined by illness.
The fund, registered in the Channel Islands, announced this week it
raised its capital by 18 million euros ($28 million) to 88 million euros
($137.3 million) in a share placing that was 70 percent oversubscribed.
CEIBA is the only fund dedicated exclusively to investing in Cuba,
focusing on real estate development and tourism. It is the foreign
shareholder of the Cuban joint venture that owns the Miramar Trade
Center, Havana's main business district.
"We will be the first vehicle for investment in Cuba to be quoted on a
major market," said the fund's managing director, Sebastiaan Berger, a
Berger said the oversubscription of shares at a time of gloom on
financial markets showed that investors were really interested in Cuba.
Steps to liberalize Cuba's state-dominated economy have begun under
President Raul Castro, who succeeded his brother Fidel on Feb. 24 as the
first new Cuban leader in half a century.
CEIBA's management is not betting on Communist Cuba opening up to
capitalism any time soon, though the lifting of U.S. sanctions against
Havana would likely result in a large increase in the fund's asset value.
"We are not an event-driven fund. We are investing in ventures that make
sense today in Cuba and our aim is long-term capital growth," Berger said.
The fund's investors include investment trust SVM Global and hedge fund
Value Catalyst, as well as pension funds and banks. For three years, the
fund has had a yield of 6 percent to 8 percent and paid shareholders
annual dividends of 6 percent.
U.S. investors cannot buy shares due to Washington's trade and financial
embargo against Cuba, maintained since 1962.
The only other fund aimed at Cuba-related business is the Herzfeld
Caribbean Basin Fund CUBA.O, which invests in U.S. companies that stand
to gain from an end to the embargo on Cuba, such as shipping companies,
holiday cruise lines and other Florida-based concerns.
Share prices of the fund started in 1994 by investment guru Thomas
Herzfeld fluctuated wildly when Fidel Castro fell ill in 2006 and
disappeared from public sight, fueling speculation he was dead.
Leisure Canada (LCN.V: Quote, Profile, Research), a Vancouver company
listed in Toronto, plans to develop hotel resorts with golf courses in
Cuba, but so far no investment has been made.
CEIBA plans to invest some $36 million in a 290-room beach hotel near
the colonial town of Trinidad and build an amusement park in Varadero,
Cuba's main holiday resort, that will include a water park.
A futuristic plan on the drawing board involves floating 22-room hotels
off tropical keys on Cuba's south coast.
Floating on water is one way to avoid any risk of U.S. sanctions that
penalize companies that invest in property confiscated in Cuba after
Fidel Castro's 1959 revolution. (Editing by Anthony Boadle and Maureen