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Capital Allocators – Inside the Institutional Investment Industry

Rodrigo Bitar – Empty Rooms: Investing in Venezuela (Capital Allocators, EP.268)

Capital Allocators – Inside the Institutional Investment Industry

Ted Seides – Allocator and Asset Management Expert

Business, Investing

4.7841 Ratings

🗓️ 29 August 2022

⏱️ 38 minutes

🧾️ Download transcript

Summary

On today's show we'll discuss a classic empty room – an opportunity ignored by most investors. In this case, we dive into the investment case for Venezuela, a non-starter for pretty much every institution because of the country's autocratic political regime, sanctions, and headline risk. But alongside those known risks are the potential for significant rewards.

Rodrigo Bitar is the Co-Founder and Managing Partner of 3B1 Partners, the leading private equity fund making growth investments in Venezuela. 3B1 invests in high-quality companies with leading positions in basic industries, while looking to capture a change in macroeconomic conditions in the country.

Our conversation covers Rodrigo's upbringing in Chile, professional background, and investment opportunity in Venezuela. We discuss Venezuela's sanctions, economic contraction, and dollarization of the economy. We then turn to investing in the country, including sourcing, due diligence, and an example of a recent transaction. We close with a discussion of the upside and risks to investing in Venezuela.

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Show Notes

(3:18) Rodrigo's background
(6:50) Family dynamics
(10:13) Investible assets in Venezuela
(12:03) Impact of Russian oil restrictions
(13:38) Surviving economic turmoil 
(17:27) Private vs. public markets in Venezuela
(19:31) Identifying companies 
(21:51) Due diligence process 
(23:49) Assessing valuations 
(25:28) Risks unique to Venezuela 
(28:09) Conversations with potential investors
(32:05) Closing questions 

Transcript

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0:00.0

Capital Allocators is brought to you by Ten East, an investment platform for sophisticated investors to access private markets.

0:10.5

Ten East brings benefits of having your own family office without the cost and headaches of doing so.

0:16.8

It's founded and led by Michael LaFelle, former deputy executive managing member of Davidson Kempner.

0:24.2

Michael and his investment team offer members the opportunity to co-invest by offering at their

0:29.1

discretion. Michael and his team source, diligence, and commit material personal capital to each

0:35.3

investment. The opportunities shared on the Ten East platform

0:38.9

offer exposure to private credit, real estate, niche venture and private equity, and other

0:44.5

idiosyncratic investments that typically aren't available through traditional channels.

0:49.2

The principles have over a decade track record of investing in these types of exposures

0:53.5

across more than 350

0:55.7

transactions. Post-investment, the Tennis team conducts ongoing monitoring and reporting,

1:01.8

just as you'd expect from an institutional investment organization. I've known Michael for about a

1:07.0

decade, and after becoming impressed by the quality of 10 East offerings, its research

1:11.6

process, and high-quality investment team, I became an advisor to the organization, an investor

1:17.1

in multiple offerings. You can learn more and join me as a member at 10-east.com. That's the number 10,

1:25.4

east.co.O.

1:33.4

Capital Allocators is also brought to you by SRS Aquium.

1:37.2

Want to make sure your M&A processes aren't stuck in the past?

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How about partnering with a company that's been defining the future of dealmaking for nearly two decades instead?

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When it comes to M&A innovation,

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SRS Aquium has reshaped the way deals get done more than anyone else, streamlining processes for maximum efficiency and minimum headaches. Professional shareholder representation, online

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M&A payments, digital stockholder solicitation,

...

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