Miami’s Hugo Cancio seeks capital for Cuba opportunities
Hugo Cancio, the Miami entrepreneur best known for promoting Cuban musicians on U.S. tour, is beefing up his Cuba business offerings on the U.S. stock market to raise money for expansion.
Cancio’s Fuego Enterprises entertainment and media company is already listed on the U.S. over-the-counter exchange. Now, he’s merging his communications, transport and consulting startup with Fuego and renaming both as the newer Cuba Business Development Group. The plan: to raise millions more in a secondary offering for the merged company within the next six months or so.
The 48-year-old pioneer hopes extra funding will allow his group to launch an Internet TV channel, OnCuba TV, which would offer shows made in Cuba.
He also aims to start a second magazine to complement OnCuba, the group’s travel monthly that debuted in March to serve U.S. charter flights to the island.
The new publication will focus on style, celebrity and fashion in Cuba and serve both U.S. and European audiences, Cancio said in a lengthy interview with CubaNews.
Why the expansion push now, more than five years after Fuego went public as FUGI?
Cancio sees Raúl Castro’s regime moving ahead with economic reforms that allow small business, home sales and auto sales on the island. He’s also confident that President Barack Obama in a second term will allow more U.S. business links with with Cuba.
“If that happens, our opportunities are endless in media, entertainment, communications and cargo,” said Cancio.
At least one well-known investor is bullish: Tom Herzfeld. The closed-end fund guru in 1995 founded The Herzfeld Caribbean Basin Fund, which invests in companies that stand to gain as Cuba opens its economy. Herzfeld’s CUBA fund now manages about $30 million.
It holds stakes both in Cancio’s Fuego En-terprises and his newer Cuba Business Development Group (CBDG).
“This is the cutting edge of American companies looking to Cuba,” Herzfeld said. “Hugo was able to get licenses from the U.S. government and engage in business with Cuba” permitted through exemptions to the 50-year-old U.S. embargo against the island. He’s licensed in areas from media to travel, from handling family packages to Cuba to replenishing minutes on pre-paid cellphones in Cuba.
As of Dec. 31, Herzfeld’s fund had 377,100 shares in Fuego, valued at $4,148, the stock’s market value. It had 100,000 shares in CBDG, valued at zero, because it was not trading then. The fund showed a loss on both companies for 2011 — before the companies prepared to merge and expand.
Herzfeld, who has known Cancio for more than a decade, praises him enthusiastically.
“He’s an astute businessman, very sophisticated, and cares about the people of Cuba,” said Herzfeld. “I was surprised someone coming out of the entertainment world would know so much about how to take a company public and manage it.”
Cancio hails from a family of musicians; his father was in the popular band Los Zafiros and his mother was a singer. He grew up in a big beach house in Varadero where musicians often gathered, sometimes until dawn.
“I had a privileged youth,” said Cancio. His mother took him and his sister to South Florida in 1980 “to live in a place that was the size of the bathroom of my Cuban house.”
Cancio finished high school in Miami Beach, attended Miami-Dade College, worked for awhile selling cars and for more than two decades, has been self-employed. He enjoys being his own boss, setting his own goals and reaping rewards from his own endeavors..
Business with Cuba was far from his mind when on a 1995 trip to the Cayman Islands, he ran into a Cuban who said Havana planned to let emigres from the 1980 Mariel exodus re-turn to the island. Within a month, Cancio set up an office in Hialeah and sought U.S. licenses to offer trips to Cuba.
Soon, he had five authorized travel agencies and was working with Cuba’s Havantur company, traveling back and forth to the island regularly. As Cuba became his focus, Cancio became active on policy issues, urging Washington to end its embargo and Havana to open up more to its emigres.
Last year, Cancio — along with New York lawyer Antonio Martínez and seven other embargo foes — formed the United States-Cuba Now Political Action Committee, which is headquartered in New York and Tampa (see “Anti-embargo forces create PAC to pressure Washington, CubaNews, May 2011, page 6).
Hardliners in South Florida’s Cuban community balked at the young, dark-skinned maverick.
“I’m accused of being communist. It bothers me, because it’s not true,” said the go-getter, who dressed casually in designer jeans during an interview over coffee near his suburban home.
Cancio said Fuego has revenues of about $2 million a year, mainly from concert tours that have featured such Cuban troubadours as Pablo Milanés and Silvio Rodríguez.
Not every venture has succeeded. A music festival proposed for Homestead’s speedway south of Miami ended in a lawsuit that some linked to pressure from Cuban hardliners.
With the upcoming merger, Cancio aims to double revenue for his publicly-traded group to $4 million a year. That includes expanding two of his newer ventures: Mascell, a mobile-phone service for Cuba, and Universal Cargo Services, which sends food, clothes and other gifts to families in Cuba.
“We’re well-positioned to grow,” he said. “We have the ability to raise capital [on the U.S. stock market] to take advantage of opportunities as they happen ... and people in Cuba take my calls. That’s my biggest asset.”
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