Investors headed to post-Maduro Venezuela to scout out opportunities

Highlights:

• Bondholders, corporate investors plan trips to assess post-Maduro opportunities
• Signum Global Advisors expands conference due to high interest
• US action reduces perceived risk, attracts diverse investors

Dozens of US and other investors ranging from hedge fund managers to energy investors plan to travel to Venezuela in the coming weeks with hopes of meeting the country's top politicians and business leaders and scouting out investment opportunities, according to event organizers and participants.

Three investor trips are being organized by separate advisory groups, with New Jersey-based Trans-National Research and Orinoco Research, a Caracas-based boutique research advisory firm adding to similar efforts by Signum Global Advisors, according to an investor source and the firms' founders.

The trips by Trans-National and Orinoco have not previously been reported while outlines of the Signum trip have been public.

Investor interest in Venezuela, which is home to the world's largest proven oil reserves and owes more than $100 billion in debt that needs restructuring, has ramped up dramatically since the US capture of former President Nicolas Maduro in January. Washington and Caracas agreeing on Thursday to re-establish diplomatic ties is another major step towards engagement with what was once among Latin America's most prosperous economies.

"It's a coiled spring of opportunity," said Jesse Cole, president of Sky Drop Capital, who plans to travel to Venezuela on one of the upcoming investment trips and sees the country as exciting for energy, finance and technology investments.

Cole, based in Miami, set up a manufacturing facility in the country in 1998 but left in 2011 after a years-long push by the government of former President Hugo Chavez to expropriate key industries resulted in foreign investors fleeing.

Now he sees conditions rapidly improving and says he is getting interest from offices managing the wealth of high net-worth families as well as high net-worth individuals and private equity groups looking to allocate $25 to $100 million apiece to investment there.

"The Venezuela I left, I don't think is the Venezuela I'm returning to," said Cole.

Investor trips organized

One trip slated for 16-17 March is being organized by New Jersey-based Trans-National Research, according to one source familiar with the situation.

Trans-National specializes in helping investors forge relationships in "frontier" markets, said Marc Zeepvat, the firm's president and head of research, who confirmed the trip but declined to confirm the precise date or agenda.

"The obvious focus for them (the investors) is to get a handle on both macroeconomic and political stability," Zeepvat said.

Orinoco Research is organizing another trip in April, said its founder Elias Ferrer.

Senior-level Venezuelan officials will attend private meetings being organized for the investors, said Ferrer, and participants will predominantly be bondholders looking to gather information and share ideas for the country's restructuring, while oil and real estate investors have also signed up.

Ferrer said most people signing up for the two-day event, which has a price tag of $7,000 per person, are Americans whom he will help to get visas. The event is followed with a beach trip to the nearby Los Roques archipelago, famous for its crystal-clear water, white sand and rustic posadas.

In addition, Signum is organizing a two-day conference from 22-24 March in Venezuela which has attracted 55 participants.

"Venezuela has several big advantages, including its energy reserves and US backing," said Charles Myers, chairman and founder of Signum.

About half of those traveling with Signum are asset managers and hedge funds, Myers said, many of which own or have recently bought debt issued by Venezuela's government or its state oil giant PDVSA, both of which have been in default since 2017.

High level meetings on the agenda

Draft agendas for the meetings are crammed with high level movers and shakers in Venezuela's interim government, according to the investor source who received details of the trips and shared them with Reuters.

Delcy Rodriguez, current acting president and formerly Maduro's deputy, appears on one draft agenda, the investor source said.

PDVSA CEO Hector Obragon is also listed for two events. Trans-National is advertising meetings with Finance Minister Anabel Pereira and central bank policymaker Laura Guerra while Orinoco's agenda includes Mining Minister Hector Silva and stock exchange CEO Jose Grasso, that source said.

Orinoco's Ferrer declined to comment on the agenda.

Neither the Venezuelan communications ministry, which handles all press queries for the government, PDVSA or the central bank responded to requests for comment. The Caracas stock exchange also did not respond.

White House spokeswoman Taylor Rogers said that critical minerals, mining, and oil and gas companies are moving at "Trump speed" to invest in newfound Venezuelan markets.

"Secretary Burgum met with Delcy Rodriguez and investors from a wide range of industries in Venezuela this week, marking rapid progress and highlighting the great interest to get capital flowing into the country again," Rogers said, referring to US Interior Secretary Doug Burgum, who wrapped up a Venezuela trip on Thursday.

Cautious opportunism

The US action in January has shaken up the landscape for investors gearing up for a massive debt restructuring as well as the opportunity to put cash to work in areas from mining and energy to real estate and tourism.

But not everyone is ready to head to Caracas just yet.

Petar Atanasov, co-head of sovereign research at Gramercy Funds Management, a hedge fund with long-term holdings in Venezuela, said that they are holding off travel there for now.

"As things continue to hopefully normalize, potentially we can see that happening in the not so distant future," Atanasov said. "There is still a little bit of hesitation in some people about the situation there."

Sanctions remain a hurdle for investors, since Washington has not yet lifted sanctions on acting President Rodriguez and other senior-level policy makers.

"Actual transactions, for the moment, remain out of the question," said Trans-National's Zeepvat. "We have to be mindful not to provide advice or consulting services to any of the sanctioned counterparties."