Subject: Proposal for the financial and legal structuring of the investment vehicle for Cuba’s reconstruction

Dear members of the Cuban American National Chamber of Commerce,

I hope you are doing very well.

In line with our recent meetings and our firm shared commitment to channel strategic investments into infrastructure, real estate, and energy, I have been analyzing which financial and legal vehicle would be most efficient for organizing the capital of families and major investors of Cuban origin in the United States. 

Venture Capital is a form of investment that consists of providing financial resources to companies with high growth potential. Unlike the stock market, these investments are made in companies that are not listed on public markets. The professional investor assumes risk by becoming a shareholder of the company, with the expectation of obtaining significant capital gains in the medium or short term when selling the stake. Funds do not invest at just any time; the level of risk and the need for capital determine the entry stage: Seed Stage: Resources are provided before the start of mass production, usually to finance product design or test prototypes. Start-up: Financing for the initial development and first commercialization of a newly created company. Expansion: Investment in companies that are already profitable, intended to accelerate growth, purchase fixed assets, or enter new markets. Consolidation and Buyouts (LBO/MBO): Acquisition of mature companies, often supporting the company’s own managers in taking control of the business.

For a fund to assume the risk of investing, the project must meet essential requirements: An exceptional management team: This is the key factor above all others. A large market: There must be sufficiently large potential demand to ensure rapid growth and secure future profits. Differentiated innovation: It does not necessarily have to be “high technology”; Venture Capital exists whenever the company offers a product, service, or business model that is differentiated from the competition. An exit strategy (Divestment): The investment is temporary; there is an initial commitment, and disbursements are made gradually through capital calls as needed to meet investment payments. The ultimate objective is to exit the company and realize the return through a sale to a strategic investor, an initial public offering, or a share repurchase by the company itself.

The industry-standard structure, and the most efficient one for U.S. investors, is the Private Equity model organized as a Limited Partnership (LP), typically formed in the state of Delaware because of its legal certainty and flexibility.

Structure of the Proposed Vehicle:

1.        Management Company (LLC): The professional management company made up of sector experts, responsible for the strategic direction of the projects and for collecting management fees.

2.        General Partner (GP - LLC): The managing entity that assumes legal responsibility and makes day-to-day investment decisions.

3.        Limited Partnership (LP - The Fund): The vehicle into which families and high-net-worth investors contribute capital as passive partners (Limited Partners), relying on SEC registration exemptions, such as Regulation D, Rule 506, aimed at Accredited Investors.

This model ensures full tax transparency (pass-through), avoiding double taxation: the fund is not taxed at the federal corporate level; instead, income and losses flow directly through to each investor’s tax return via Form K-1.

Viability Analysis: Infrastructure/Energy vs. Real Estate/Hotel Example

To structure the fund correctly, we must understand that timelines, liquidity, and risk profiles vary substantially depending on where the capital is deployed. Below is a comparative example of how both verticals could coexist under our management:

Vertical A: Infrastructure and Energy (Grids, Renewables)

Moderate-Low (Operational): High risk during the construction phase, but very low risk once operational due to predictable demand.

Capital Intensive: Requires massive initial disbursements and long development periods before the first returns are seen.

Stable Cash Flow: Generates consistent and predictable long-term dividends through fees or regulated tariffs.

Long Term (10–15 years): Essential for amortizing heavy assets such as solar plants, distribution grids, and logistics infrastructure.

Characteristics

Risk Profile

Capital Dynamics

Return Structure

Fund Term

Vertical B: Real Estate and Hospitality (Developments, Tourism)

Moderate-High: Highly linked to economic cycles, international tourism, and land appreciation.

Progressive Capital: Staged disbursements through capital calls as each construction phase advances.

Capital Gain + Operations: Combines income from hotel operations/rentals with a major final liquidity event when the asset is sold.

Medium Term (5–8 years): Closed cycles of acquisition, construction/renovation, stabilization, and divestment.

Investment Alternatives for Business Families Toward Cuba

If the traditional model of a general Venture Capital or Private Equity fund proves too rigid or poorly suited to the context of reconstruction in Cuba, the following are other highly effective financial structures for channeling capital from U.S. investors of Cuban origin:

1. “Club Deals” (Investor Syndication)

Instead of contributing money to a “blind fund” where managers decide where to invest, a group of business families partners on a project-by-project basis.

Advantage for Cuba: If there is a project to rebuild a port or establish an energy plant, it is presented to the Chamber. Only the families with interest or know-how in that specific sector decide to co-invest. This provides much greater direct control over where the capital is deployed.

2. Project Finance (Financing of Structural Projects)

This is the leading model for heavy infrastructure such as hospitals, solar plants, highways, and electrical grids. Capital is not invested in a “company,” but rather in an entity created exclusively for that project, known as a Special Purpose Vehicle (SPV).

Advantage for Cuba: The debt and invested capital are repaid exclusively from the cash flows generated by that specific asset in the future, such as payments from the sale of energy. This isolates the families’ patrimonial risk, since the only collateral is the project itself.

3. Joint Ventures (Public-Private or Private-Private Partnerships)

This is a very common model in emerging or transition markets. U.S. capital from the families provides financing, technology, and modern management culture while partnering with local entities.

Advantage for Cuba: The local partner is essential for contributing land, a network of contacts, navigation through local bureaucracy, and labor, thereby drastically reducing entry frictions.

Conclusion and Recommended Strategy

To optimize fundraising from families and large corporations, the most advisable strategy is not to mix sectors within a single generalist fund, but rather to use Special Purpose Vehicles (SPVs) or independent funds under the same management company. In this way, investors seeking stable cash flows and long-term income may choose the Energy/Infrastructure vertical, while those seeking higher returns and shorter-term capital gains may direct their capital to the Real Estate/Hospitality vertical, following the sector examples presented in this report.

Francisco Ramírez Perete is Vice President of Grupo Corporación HMS and CEO/CFO of Corporación HMS, based in Spain. Mr. Ramírez Perete holds a degree in Business Administration and Management and has an Executive Master’s degree in Finance. He also serves as a board member on several boards of directors of different companies.