For portfolio manager Ben Cleary, Venezuela in the aftermath of US President Donald Trump’s controversial attack is one of the greatest money-making opportunities ever.
Cleary, whose main Tribeca Global Natural Resources feeder fund generated estimated returns of 127% last year, is sending a team of investors to Caracas this week to meet would-be partners and inspect potential assets. Over the weekend, his team held discussions with Venezuelan firms about potential investment opportunities.
“Every bank is sending people in,” the Australia-based investor said in an interview, describing numerous calls and meetings facilitated by bankers and brokers, including Canadian firms. “It’s a massive gold rush.”
The rapid attempt to weigh up investment opportunities in the country comes after the US snatched Venezuela’s leader Nicolás Maduro in an audacious raid. But there is still huge uncertainty about what comes next.
Maduro’s deputy, who has now become acting president, initially denounced the raid as “barbaric” but has now struck a more conciliatory tone, asking the Trump administration to cooperate with her country. Trump, though, has made clear he considers the US to be in charge. He also said that US energy companies will spend billions of dollars to rebuild Venezuela’s crumbling energy infrastructure.
Cleary, a partner and director of the $4 billion Tribeca Investment Partners, made his big returns last year in part by betting on precious metals and mining firms. He said he’d be willing to add Venezuelan assets worth as much as 10% of his fund’s capital if Trump’s stated program is successful and the country becomes conducive for foreign investment.
Bond Turnaround
Opportunities range from buying into publicly traded companies that will gain from ramped up resource production to providing private credit to local firms, Cleary said. Bond funds have already benefited from a turnaround in Venezuela’s debt prices, after Trump ramped up pressure on the country in recent months.
Other hedge funds that are eyeing opportunities in the oil-rich South American country include Canaima Capital Management, which represents $800 million of Venezuelan creditors, and Frontier Road Ltd.
Celestino Amore, co-founder of Canaima — a fund named after a national park in Venezuela that for years has focused on the nation’s defaulted notes — said on Bloomberg Television Monday that he sees the potential for a restructuring of Venezuela’s $60 billion in sovereign debt as early as this year.
“The big bet here is that Venezuela will go back into the Western financial system,” Amore said. “If this happens, sanctions will be removed, investment banks will flock to Venezuela and there will be tons of restructuring not only on the debt but infrastructure. The whole economy will be rebuilt.”
Martin Bercetche, chief investment officer and founder of emerging-markets-focused hedge fund Frontier Road, said he saw an “asymmetric upside” to Venezuelan sovereign bonds, adding timing remained an “uncertainty.” His firm, which has about 6% of its assets invested in the country’s debt, made about 31% last year.
The US move to take Maduro into custody has generated backlash from some major powers. China has led countries denouncing the capture as a “hegemonic act.”
It is unclear how much protection investors in Venezuela will have — not just in terms of legal recourse but even physical control over assets, given the country’s changing security situation.
That uncertainty will add to the hurdles facing larger investors such as pension plans, sovereign wealth funds and private equity giants who may eventually join the investment rush. It may also mean that by the time they get the green light to invest, the big profits will no longer be on the table.
“By the time the people who can’t invest can, the horse will have bolted,” Cleary said.
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