Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Venezuelan rum maker offers shares in hope of China-style transition

Stock MarketsJan 27, 2020 08:12AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

By Corina Pons and Mayela Armas

CARACAS (Reuters) - Rum distiller Ron Santa Teresa (CR:RST) has launched Venezuela's first public share offering in 11 years, citing rare optimism that the socialist-ruled nation may see an economic transition similar to China and the Soviet Union.

One of Venezuela's best-known brands, Santa Teresa, which exports via an alliance with Bermuda-based Bacardi Ltd., sold an initial 1 million shares on Friday. It was the firm's first in a series of offers of bolivar-denominated shares hoped to raise the equivalent of a modest $3 million this year.

Company president Alberto Vollmer compared the sale, the first public share offering since 2008 on the diminished Caracas bourse, to the re-opening of the Shanghai Stock Exchange 30 years ago that helped revive China's economy.

Another Venezuelan company, real estate developer Fondo de Valores Inmobiliarios (CR:FVIb) (FIV), also plans a share issue this year, according to its president, Horacio Velutini.

The two men belong to an informal group known as "Optimists Anonymous" made up of 39 corporate leaders, bankers and investors who think businesses will become profitable again as President Nicolas Maduro will not be able to reverse his opening of the ailing economy.

Last year, the government unexpectedly relaxed 15 years of stringent economic regulations, abandoning enforcement of price controls and allowing dollar transactions in the face of runaway inflation and U.S. sanctions.

The Santa Teresa and FIV bosses' views contrast with the rest of the business establishment, the political opposition, and U.S. President Donald Trump's administration - all of whom maintain the economy cannot fully recover with Maduro in power.

"When we sit down with authorities, or businesses, or trade unions, we tell them that Venezuela's economic recovery will involve (share offerings)," Vollmer told Reuters.

"We're taking the first step, let's see who follows."

Vollmer led a ceremony at a Caracas roof bar on Friday, where attendants toasted with glasses of rum, to celebrate the sale of shares that will finance the expansion of warehouses and the acquisition of new barrels to age their spirits.

Investors included Venezuelans living in country and abroad.


Velutini said his real estate group plans to use proceeds of its planned share sale to buy up office space in Caracas, which he says is looking cheap.

"After 15 years in a controlled economy, they've loosened the moorings, and we're not used to it yet," said Velutini, who likened the situation to the Soviet Union's perestroika. "Venezuela is entering a cycle of liberal economic opening."

Under Maduro's rule since 2013, Venezuela has become a deeply unequal society in which small pockets of flashy wealth in the capital and major cities contrast with deep poverty and chronic malnutrition driving a migration exodus.

Vollmer and Velutini say members of "Optimists Anonymous" have met U.S. authorities to discuss how Washington's sanctions have affected private sector businesses.

Those sanctions prevent U.S. firms from doing business with Venezuela's government and state-run companies, but do not explicitly block commerce between private companies.

Venezuelan businesses say that in practice, overzealous compliance of sanctions often hamstring their operations, and measures such as prohibiting direct flights between the two countries have boosted operating costs.

The State Department, in a response to questions, said the United States is using sanctions to support a "transition to free and fair presidential elections."

"U.S. sanctions on Maduro and his cronies have been targeted, while also ensuring that the flow of humanitarian goods and services to the Venezuelan people is not prohibited by U.S. sanctions," said a State Department spokesperson.

Share offerings, albeit a pittance compared to others internationally, could serve as a lifeline to Venezuelan companies that have been effectively cut off from bank financing. Inflation of 30,000 percent and government regulations left banks unwilling to provide even the most basic of loans.

The Caracas bourse was largely abandoned after late socialist leader Hugo Chavez in 2007 nationalized the two largest companies that traded on it, though the exchange stayed open with a trickle of business.

Firms would at times issue shares to existing shareholders as a way of paying dividends. Entrepreneurs hope to lobby the government so that they can sell shares in dollars.

Local finance industry experts consulted by Reuters said they believe there is demand for shares both within the Venezuelan business community and among Venezuelans abroad who see the economic situation changing.

"Negativity is like a virus that reached Venezuela, and we're the anti-body," said Velutini.

Venezuelan rum maker offers shares in hope of China-style transition

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email