Caribbean Passport Programs Hit Speed Bump

Many nations have citizenship-by-investment policies to entice deep pockets, but Caribbean nations have been under fire for their relatively low hurdles. The tiny island of Dominica, for example, offers its passport to globetrotters for $100,000. While these policies have been a cash drop for smaller economies, Western governments have been less enamored by their propensity, at least in theory, to attract tax cheats and terrorists. Canada just made headlines by terminating visa-free travel from Antigua and Barbuda, requiring nationals to apply for their visas through a regional embassy in Trinidad. The lawyer-dominated citizenship-by-investment industry is likely to dismiss the Canadian decision as caprice, but high-net-worth investors should be less cavalier. Shifting geopolitical sentiment suggests that a so-called “golden passport” may be a less prominent reason to allocate funds to the Caribbean. The good news is that the return-on-investment on many projects in the region justifies the allocation risk, regardless of citizenship dividends.

Our Vantage Point: Investors based in the developing world should focus their Caribbean deal activity on project due diligence, rather than potentially-mutable passport benefits.

Learn more at Antillean Media Group.

© 2017 Cranganore Inc. All rights reserved.

Image: St. Lucia is among those Caribbean nations which attracts foreign investment. Credit: Dbvirago at Can Stock Photo Inc.

Pakistan Lures Bargain Hunters

Currency-depreciation rumors are playing out in Pakistan, with the rupee tumbling over 3.0% in mid-week trading. The realignment is provoked, at least fundamentally, by a deteriorating external account. But it is exacerbated by faltering confidence in the government. Prime Minister Sharif is under investigation for money-laundering allegations. There is good news behind the veil of volatility. Prior to this week, the IMF targeted economic growth at 5.0% in 2017 and 5.2% in 2018. A weaker rupee could bolster that momentum, given a lively export sector, although the impact of higher local interest rates is unclear. We suggest that cross-border investors actually sharpen their focus on Pakistan. Foreign-exchange shocks often depress private- and public-sector valuations; they can lead to outsized discounts. We acknowledge that a perpetual obstacle to deal-making here is ad hoc headline analysis. A cover story from The Atlantic in December 2011 lingers vividly: “The Ally From Hell: What to Do About Pakistan.” There are other examples. In this market, the risk tolerant are best served by maneuvering to the front of the economic cycle, rather than centering attention on international affairs.

Our Vantage Point: In Pakistan, like other emerging markets, asset volatility can be unnerving. But that skittishness may cultivate widespread opportunity.

Learn more at Bloomberg.

© 2017 Cranganore Inc. All rights reserved.

Image: Pakistan is a major player in agricultural exports, ranking eighth globally in farm output.. Credit: Paop at Can Stock Photo Inc.

Can a Major Firm Be a Venture Capitalist?

Tokyo-based Trend Micro—a force in the cybersecurity industry—announced last week that it is rolling out a $100 million venture capital effort, apparently to fund startups in the internet-of-things space. The idea, in its own words, is “to dive into new areas without disrupting core business resources.” However exciting for the publicly-listed firm, the focus is likely to have a greater impact on its balance sheet than its business operations, at least for the foreseeable future. Corporate venture capital units often invest alongside top-tier funds until they can sort out their own priorities and strategies. The theoretical danger in that scenario is that underlying valuations of target companies get pushed higher and higher, leading to awkward re-pricing on an eventual exit. Trend Micro might serve its commercial interests better by creating a smaller funding pool that centers on still-fledgling opportunities. Of course the hazard there is that a $1-to-$5 million investment can easily get lost in the c-suite. We offer Trend Micro the benefit of doubt, but sustaining an effective corporate venture capital unit demands more than a pool of cash.

Our Vantage Point: Silicon Valley may laud corporate venture capital for adding depth to the startup scene. But the actual dividend to investors and entrepreneurs is unclear.

Learn more at DealStreetAsia.

© 2017 Cranganore Inc. All rights reserved.

Image: In Japanese tradition, the maneki neko is a good luck talisman. Credit: Icenando at Can Stock Photo Inc.