Leni Gas Cuba hopes to be part of island's unseen revolution

China has proved a hybrid of communism and capitalism can work spectacularly well, so entrepreneur David Lenigas's move into Cuba is intriguing and well-timed. In true Ronseal “it does what it says on the tin” fashion, the name of his new venture, Leni Gas Cuba, more or less sums up what the company is about. “We are unashamedly an inward/outward multi-strategy investment vehicle for the growth of Cuba,” Lenigas proclaims. The company, rejoicing in the ticker symbol CUBA, began trading on the ICAP Securities & Derivatives Exchange (ISDX) on Monday, November 2. That makes it, to the best of Lenigas's knowledge, the only listed company in the world reporting to proper guidelines, with regulated corporate governance, that is focused entirely on Cuba. All of which begs the questions: Why Cuba? Why now? Two questions, but one answer: because Cuba is looking to grow its own economy and reduce its massive dependence on imports. It spends US$2bn a year on imports, Lenigas told Proactive Investors. The well-publicised recent thawing of relations between Cuba and the US is obviously a boon, but as Lenigas points out, there are plenty of countries that have maintained normal relations with the island state since the days of the Cuban missile crisis - Canada and the UK, to name just two. Meanwhile, President Obama has been pressing Congress since last December to ditch the embargo. Whether he succeeds or not there is plenty of scope for Cuba to get the economy moving, with a little help from its friends. Leni Gas Cuba's (LON:CUBA) role will be to provide working capital and expansion capital to Cuba's own entrepreneurs. It will be an investment company, not an operating company. In fact, Cuban law prevents it from being the latter. That restriction puts a premium on the connections of Lenigas and his team in the country, but with their track record, you can be assured they are well-connected. The company already has a 15% interest in Petro Australis, an oil and gas company that has onshore energy interests in Cuba, and a 40% interest in tourism firm Travelwelcome. Those investments give a hint to the areas in which Leni Gas Cuba will invest, but the eponymous executive chairman is keen to stress he has an open mind on what to invest in. “We don't know which sector is going to be our main front-runner,” Lenigas explained. “Until such time as something comes and smacks me in the face and says this is where you want to focus, I do want a technical approach in Cuba,” he added. That being said, he concedes that tourism is obviously the area “where you will see pretty significant growth right away”. After all, who hasn't daydreamed about visiting Cuba? Oil is another probable area of focus for the government, which is keen to grow its energy industry. “They need foreign investment to kick-start their oil industry and they can't get it from the US,” Lenigas noted. Other sectors of interest mentioned on Lenigas's Cuba website include agribusiness, manufacturing, industrial, transport and logistics, biotech, construction, utilities, business services, support services and retail. The aim is “to encourage highly respected business people in Cuba and give them the capital to grow”, and to do it by the book. “There are no short cuts,” Lenigas asserts. The company has raised £4.73mln, some of which came through a ground-breaking smartphone app, offered by Teathers Financial (LON:TEA), that allowed private investors to participate in the flotation on the same terms as institution. “I've got enough [capital]. I've got enough to cover the initial listing costs,” Lenigas informed Proactive. Based on a subscription price of 5p a share, the market capitalisation of Lenigas Cuba is £24.7mln. Initially the company will target investments of up to £5mln, with the intention that the company would work in conjunction with incumbent management teams to develop and deliver a strategy to grow the business. The company's admission document is up-front about the fact it will at some point in the future need to raise fresh capital to fund future acquisitions, but Lenigas is very bullish about the enthusiasm of institutions to get involved in Cuba's development story. His belief is supported by the fact that, in terms of listed plays focused on Cuba - “not Trinidad, not the Dominican Republic, not the Bahamas; just Cuba” - Leni Gas Cuba is the only game in town. Down the road, there may be opportunities to spin out acquired investments into separate companies, whether by stock market listing or trade sale, and this may give the opportunity for the payment of special dividends, but generally this is going to be a stock where the rewards come from share price growth rather than dividends. How fast that will happen depends largely on how quickly Cuba can make its hybrid form of Communist capitalism work, but Leni Gas is clearly committed to helping the country along that path.