October 22, 2018 / 6:27 PM / a month ago

Cuba fund first to be listed on London exchange

HAVANA (Reuters) - CEIBA Investments, a fund that owns stakes in hotels and commercial property across Cuba, said on Monday it raised $39 million on its first day of trading on the London Stock Exchange and will use the money to expand its business on the island.

Tourists pass by the former stock exchange building, in Havana, Cuba, October 16, 2018. REUTERS/Alexandre Meneghini

CEIBA, launched in 2001, has investments in office buildings and four hotels across the capital city Havana and the beach resort of Varadero. Proceeds from the IPO are earmarked to upgrade and expand existing properties as well as build a new 400-room hotel in the central town of Trinidad.

“The company has successfully raised £30 million ($39 million) through the Initial Issue of 30,000,000 new shares at a price of 100 pence per share, capitalizing CEIBA at approximately £137 million ($177.6 million),” it said in a statement.

The investment fund, listed on the Specialist Fund Segment of the LSE, was the first focused on the Communist-run Caribbean island to be listed on the exchange, the exchange said.

Aberdeen Asset Investments recently became the investment manager of the company, and Aberdeen Standard Investments is managing the firm, with CEIBA CEO Sebastiaan Berger its portfolio manager.

This is Aberdeen Standard’s first experience of managing investment in Cuba, a country seen by investors as having huge potential but still subject to crippling U.S. sanctions.

“It has been 22 years that I have been involved with foreign direct investment in Cuba,” Berger told Reuters. “Of all transactions and achievements I believe this one has been the most difficult one to accomplish and at the same time the one that will likely have the greatest positive impact on Cuba’s economic future,” he added.

Tourism is a vital industry and a main source of foreign revenues for Cuba, whose economy is suffering after decades of sanctions from Washington, dwindling support from crisis-hit ally Venezuela and declining revenues from goods exports.

Investors in Cuba’s tourism industry had high hopes for the sector when then-U.S. President Barack Obama restored diplomatic relations in 2015 after more than five decades of hostilities.

His successor, Donald Trump, however, has been dialing back the changes. His introduction of new travel restrictions has sucked some air out of Cuba’s tourism boom, but a number of foreign businesses such as Spain’s Melia Hotels and China’s Jin Jiang are pursuing new investments.

Reporting by Marc Frank; Editing by Dan Grebler

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