Bloomberg
Scion of billionaire family hunts for cheap assets in Venezuela
(Bloomberg) – The name Cisneros is synonymous with business acumen and opulence in the minds of Venezuelans old enough to remember the years before Hugo Chavez. For generations, the billionaire family brought the Studebaker, Pepsi-Cola and department stores to the oil-rich country. It started DirecTV in Latin America, hosted beauty pageants, produced soap operas, and owned banks, television stations, ice machines, and breweries. Now, decades after Chavez moved most of the family and wealth to America, the Socialist Revolution, a new generation of Cisneros, is searching the devastated economy for cheap assets. Eduardo Cisneros, the grandson of Patriarch Diego Cisneros, co-founded a Florida private equity fund that has raised over $ 200 million from investors. after filing with the SEC. The fund, called 3B1 Guacamaya Fund LP, has already used about $ 60 million of that money last year to track down Venezuelan companies, including a paint maker, according to several people with knowledge of the dealers who asked for it, not named you were not authorized to speak publicly about the matter. Eduardo and his partner – Rodrigo Bitar, the head of a New York-based M&A boutique store – take the plunge and position themselves as early comers in what might turn out to be a mystery to select assets in the once wealthy nation to purchase greatly reduced prices. After years of mismanagement that caused the economy to decline by 70% and drove millions of Venezuelans to flee, Chavez’s hand-picked successor, Nicolas Maduro, is slowly pushing for free market reforms to ease the crisis and cement his power in some local ones Analysts actually predict the economy will grow in 2021 as Maduro relaxes Covid restrictions. Even the lukewarm expansion would hold up a series of seven years of economic contraction: “The chances of profit are immensely high in the first phase of the economic recovery,” said Peter West, economic advisor at EM Funding in London. “But you also need to be a high risk investor willing to dip your toes in the water.” The 3B1 Guacamaya Fund is headquartered in the same Coral Gables, Florida, as the Cisneros Corporation, a consultancy with “young,” modern and creative professional leadership, “founded by brothers Eduardo, Andres and Henrique, according to their website. The fund acquired a majority stake in the listed paint manufacturer Corimon CA. The company has not reported any results since 2015. At that time there were 1,300 employees in 190 branches in Venezuela and several other Latin American countries. Calls and messages requesting comment from Eduardo Cisneros, Cisneros Corp. General Counsel Mark Lopez and Bitar were I did not return. Corimon CEO Esteban Szekely also did not respond to calls and messages asking for comment. As limited as business was previously – the names of the other companies acquired besides Corimon could not be determined – Cisneros and Bitar quickly became the talkers of the small, close-knit community of dealmakers and financiers in the green east of Caracas. Two hundred million dollars may not go far in most of the world’s financial capitals, but in Venezuela’s stunted M&A market, it makes the duo an immediate force. And on arrival, some locals speculate that the proverbial Maduro economy and market they have been waiting for for decades – until the post-1970s oil boom collapse – may finally be nearing. In the face of U.S. sanctions, Maduro is monitoring a reform push that includes an ad -hoc dollarization of the economy after years of hyperinflation and the suppression of government controls. His regime has also begun to outsource dozens of major state-owned companies to private investors in exchange for some of the proceeds or products. While Chavez seized thousands of private businesses, the Cisneros family managed to maintain control of the businesses they operated in the country. Venezuelans still drink the family’s regional beer today, use telephone and data plans from the mobile operator Digitel and watch the television station Venevision. Venezuela-based Cuban immigrant Diego Cisneros founded the business empire in the 1930s. His sons Gustavo and Ricardo – Eduardo’s father – took control of the organization in 1970, and in the 1980s the clan began expanding outside of its home market by buying US-based sports equipment and baby product maker Spalding & Evenflo and themselves involved the Spanish-language broadcaster Univision. In 2000 the family made Florida their base for the Cisneros group and expanded further to America, first under the leadership of Gustavo and then his daughter Adriana Cisneros. There is no connection between the Cisneros Group and the Cisneros Corp. or 3B1 Guacamaya, Cisneros Group’s COO Miguel Dvorak said in a statement. Back in Caracas, a newly formed local private capital association called Venecapital, hosted an event earlier this month entitled, “Venezuela, Back on International Investor Radar.” In it, speakers announced Venezuela as the frontier market with the greatest potential and said that those who seize opportunities in the nation do not wait for regime change that never seems to come. They pointed to telecommunications, real estate, and the gas and oil services sectors as attractive destinations for foreign investors. Maduro’s government passed what is known as an anti-blockade law in October that opened a path for increased foreign investment in the energy sector, which was nationalized.In the 1970s, Scale Capital, a Chilean investment and management firm, reached a deal to acquire DirecTV- Activities in Venezuela for an undisclosed amount. Last year, an international fund called Phoenix Global Investment bought the assets of the food manufacturer Cargill in Venezuela, where it had operated for 34 years. In August 2019, a Chilean group of investors bought the local office of US-based insurer Liberty Mutual Holding Co. “The main risk is stepping in too early, before the right conditions are set,” said West of EM Funding. “It’s not difficult to imagine a scenario where things will get worse, at least for a short time.” For more articles like this, visit bloomberg.com LP
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