Venezuela offers investment opportunities, but identifying businesses is difficult

Investing in Venezuela presents attractive opportunities in sectors such as consumer goods and credit, but identifying attractive companies and closing deals remains a complex challenge for private capital, according to AlbertoNews, which cited statements by Arqos Capital managing director Francisco Amador.

Private capital operates in an environment where credit represents just 3% of Venezuela's gross domestic product, according to data cited by Amador, a low share compared with levels of between 50% and 60% recorded in other Latin American economies. This limitation on bank financing constrains the expansion and day-to-day operations of companies.

In addition to liquidity constraints, there is the ownership structure of many companies. Amador explained in the interview that many businesses belong to families that accumulated wealth during the decades of greater prosperity and have no incentive to part with their assets, which reduces purchase opportunities compared with markets where companies face financial distress.

To overcome the scarcity of official financial information and the complexity of the operating environment, investors must prioritize on-the-ground work through visits to plants, meetings with employees and direct networks of contacts. At the same time, new private capital initiatives aimed at revitalizing the domestic market are emerging.

In this regard, El Nacional recently reported that the Intrépida fund raised more than $600 million to finance initiatives that integrate technology and infrastructure in the country, while executive Adriana Cisneros estimated that in a year the conditions will be in place to channel $1 billion in investments into Venezuela.