CEIBA Investments, a closed-end fund that invests only in Cuba, plans to list on the London Stock Exchange 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 Dutch lawyer.
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, 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, 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 Bavdek)