Investment Trust Insider on Cuba

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Investment Trust Insider on Cuba

James Carthew: classic closed-end chance in Cuban property

One of the great things about the investment companies sector is that it is always evolving. The closed-end structure is the ideal vehicle for an incredibly diverse range of assets as is demonstrated by the upcoming London listing of a Cuba property fund managed by a team recently acquired by Aberdeen Standard Investments.

Ceiba Investments Limited will, as far as I can tell, be the only listed way of accessing Cuban assets directly – the Herzfeld Caribbean Basin Fund, which has ‘CUBA’ as its ticker symbol, has no investments in the country, just stocks that it thinks might benefit from exposure to the entire Caribbean basin.

Some of you with long memories might remember Beta Gran Caribe. This Cuba-focused fund was taken over by activist fund, Value Catalyst in 2001. One of the directors who went onto the board then was Sebastiaan Berger, who had been running a law firm based in the country since 1998.

Berger is the lead manager of Ceiba having taken responsibility for the fund in 2001 when it was worth just $19 million in 2001. Rather than just liquidating the portfolio, however, new investments were made, backed by additional capital. A further $92 million has been invested and $80 million paid out in cash dividends. In total return terms, the fund has made 19.5% a year for the last five years (in sterling).

Cubans can trade property between themselves but foreigners can only invest through joint ventures with local partners. Ceiba Investments’ partners are largely entities controlled by the government and Spain’s Meliã Hotels International.

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