CARACAS — Venezuela’s stock market has seen better days, but issuers, market makers and regulators hope that is about to change next year. Enter the world of Montesco Fondo Agroindustrial, a special investment vehicle focused on export-oriented agribusiness, set to start trading on Bolsa de Valores Caracas as soon as February.

Montesco, founded with a capital of USD130,435 at the official exchange rate, already got the approval of the Superintendencia Nacional de Valores, the regulatory authority, to issue bonds and securitize assets as it seeks to give an alternative boost to conventional bank loans earmarked to agricultural activities.

“Our commitment is to guarantee investors a return based on risk, as we have a transparent business model and a very demanding criteria to select projects,” said Víctor Castejón, president of Montesco. The fund, also backed by the local brokerage firm Kairos Valores, aims to finance projects with export potential, for raw crops as well as for semi-and-finished products, such as cocoa fat, an essential ingredient for chocolate and cosmetics.

Castejón, a former president of FertiNitro, a joint venture with Petróleos de Venezuela SA confiscated by the government in 2010, said the fund is evaluating four initial projects in corn, cocoa and coffee, that will offer a projected return of 31.63% over investments payable in U.S. dollars. Corn-related projects may fetch a 40% return, while cocoa-related and coffee projects will offer 15% and 18%, respectively.

Under current regulations Venezuelan stock market cannot operate in foreign currency, so shares and bonds issued by Montesco will be priced in bolivars with their equivalent in U.S. dollars. The projects under review are located in the Western part of Venezuela, Castejón said in a phone interview in Caracas.

Financing a Depleted Nation

Montesco may represent a much needed help for farmers and producers. Conventional bank loans for agricultural projects are almost non-existent as Venezuela’s economy has been contracting uninterruptedly since 2014: real GDP is estimated to have declined 77% during 2014-20, and is expected to fall further during 2021-22, according to Goldman Sachs. Venezuela is set to “remain trapped in a seemingly never-ending economic depression and hyperinflationary spiral,” analysts Alberto Ramos, Sergio Armella and Daniel Moreno wrote in a research note to investors in November reviewing the economic outlook for Latin America’s largest economies. The International Monetary Fund sees an economic contraction slowing to -5% this year and the inflation rate at 2.700%.

Venezuela’s consolidated bank loan portfolio barely reaches USD310 million, of which USD80 million are dedicated to agricultural projects, according to Caracas-based consultancy firm Aristimuño Herrera & Asociados. The figure still pales when compared with Nicaragua’s USD3.5 billion, the country with the smallest bank loan portfolio in the region, according to the most recent data compiled by FELABAN, Latin America’s Banking Association.

A Long Wait?

Although Montesco’s public listing was announced on December 16 at an event organized by the BVC, it is not clear when the shares will actually start trading. The most likely date, according to Castejón, may be February. If the plan becomes a reality the company will be Venezuela’s second fund focused on financing agricultural activity after Inversora Finagro S.A, listed on the new Bolsa Descentralizada de Valores de Venezuela (BDVA), a fully-digital market.

Calox International, a generic-drug pharmaceutical company, announced plans to list shares in March, but still remains inactive and it hasn’t offered an official explanation for the delay. The Caracas-based company, however, remains one of the most active issuers of bolivars-denominated bonds.

Bancamiga, a bank that has gained popularity by taking deposits in U.S. dollars, is also expected to start listing shares in the first quarter of 2022, but no concrete plan has been officially announced.

Venezuela’s stock market is comprised of 31 publicly-listed companies with a market capitalization of USD116 million, the lowest among Latin America’s markets, according to Rendivalores. Montesco is the seventh company this year announcing plans to list shares on Bolsa de Valores de Caracas.

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Also Relevant:
* Montesco Fondo Agrondustrial (Prospecto)



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