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U.K. growth fund to invest in hotel chain
CubaNews / December 2003

By Larry Luxner

Ceiba Finance Ltd., a British growth fund registered in the Channel Islands, plans to invest in Cuba’s tourist industry — but not in big beach hotels.

Rather, the company aims at converting elegant mansions around the island into upscale boutique properties aimed at “the discerning traveler.”

As such, the fund will sign an agreement in the next few weeks with state-run Rumbos S.A. to establish a new hotel chain.

“The deal is for the financing, management, sales and marketing of several small hotel and sport fishing areas in Cuba,” said Dutch corporate lawyer Sebastiaan A.C. Berger, director of Havana-based Zapa International Man-agement Ltd., which manages the fund.

“These properties will be marketed and branded under the name Grand Slam,” Berger told CubaNews during an interview last month in Havana. “We want to make a difference. Although Varadero has good beaches and high-end hotels, I would not personally invest there because it’s big and huge, and it’s all mass tourism. We would like to focus on tourism for the discerning traveler.”

The company plans to convert six mansions into small boutique hotels of six to 15 rooms apiece. Three properties are in the historic city of Trinidad, a UNESCO World Heritage Site; the other three are in Cienfuegos, southern Pinar del Río province and the Cienaga de Zapata swamp of Matanzas province.

A related investment is planned for the cities of Havana and Pinar del Río, where small hotels will form part of the same Grand Slam chain, said Berger. Total investment in the first phase should come to $2 million, with rooms going for $80-100 a night.

Incorporated in 1995 as Beta Gran Caribe Ltd. and denominated in Swiss francs, the fund was renamed Ceiba Finance Ltd. in 2001 and converted into euros. At present, it finances a broad range of investment projects in various sectors of the Cuban economy.

With a gross portfolio currently worth 28.8 million euros, Ceiba pays its investors annual dividends of around 6% a year.

The chairman of Ceiba’s board of directors is Sir John Morgan, former British ambassador to Mexico, Poland and South Korea. Berger, who has managed the fund since 2001, is a partner in the Havana legal consulting firm of Berger, Young & Associates.

Caribbean Property Corp. Ltd., the fund’s wholly owned subsidiary, has a staff of eight and is developing the Grand Slam project. The subsidiary, through a joint venture with Inmobiliaría Cimex S.A., recently constructed and sold two apartment buildings in Miramar.

Ceiba’s present capital structure consists of 35.5 million shares outstanding. As of Nov. 1, the fund’s net asset value (NAV) per share was 0.6775 euros.

“The share price at this point is higher than NAV, which is an indication that there’s confidence in what we do,” said Berger. “The business of the fund is to invest in Cuba in the best possible way.”

Berger added that “American investors are prohibited from investing in the fund by their own laws, since 100% of our revenues are directly or indirectly related to Cuba.” In addition, the fund’s articles and private placement memorandum prohibit U.S. citizens from investing in the fund.

Another project Ceiba Finance hopes to fund involves a tourism-related publication supported by websites. Berger calls it a “mixed-media project focused on Havana’s cultural life and sports,” and said it will be officially launched Mar. 21, 2004.

“This product will help tourists learn more about Havana, whether they want to go to a boxing match, a piano recital or the opera,” he said without elaborating. “Our general idea is to provide more information on cultural and sports activities than what’s available now.”

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