Dominican Republic: finance and other corporate transactions continue to grow
Luis Rafael Pellerano
Pellerano & Herrera
Luis Rafael Pellerano (Bio)
From banking, finance and capital markets to telecommunications and mergers and acquisitions, the Dominican Republic continues to offer a very attractive foreign investment environment. Growth in industries from construction and mining to hospitality and services remains quite strong, along with increasing numbers of general corporate transactions and new business start-ups.
The Dominican Republic's gross domestic product is forecast to grow substantially by year-end 2011, according to the International Monetary Fund and the Economic Commission for Latin America and the Caribbean.
International trade agreements with the US and Central America (DR-CAFTA) and with the European Union (EPA) benefit the economy of the Dominican Republic more than any other country in the Caribbean - leading to an increasing interest of foreign businesses to invest in the Dominican Republic. Other bilateral and multilateral free trade agreements also boost the Dominican's economy and provide expanded opportunities for foreign investment.
Since the recent amendments to the Dominican Constitution, the country's government has expanded its focus on the nation's institutions, people and environment. New laws have further modernised and provided additional protections to investment and business operations (such as streamlining corporate governance and procedures) and have continued to improve the country's legal environment.
The Dominican Republic's focus on foreign investment is illustrated by a law enacted last year to promote the film industry. The law created and restructured public institutions involved with the sector and established a taxation system that has stimulated foreign - and domestic - investment in the film industry.
With the Dominican Republic's government continuing to examine the nation's laws and regulations, the country will certainly remain a leading destination for corporations from around the world to engage in a wide variety of business and financial transactions.
Confidence in the Dominican Republic
The range of business transactions that have recently taken place in the Dominican Republic is striking, and illustrates the strength of the country's economy and the confidence that institutions and investors across the globe have in the Dominican Republic.
For example, banking, finance and capital markets transactions over the last year range from a $1 billion financing for a gold mine, involving an innovative set of guarantees including a pledge of mining rights, and a $284 million financing involving one of the largest private investors in the energy sector in the Dominican Republic and Latin America, to a $150 million loan from the Interamerican Development Bank for a local electric power company and a $114 million loan for the purchase of a power barge that was secured by a ship mortgage.
In addition, there was the $100 Million acquisition of Globestar Mining Corporation, the parent company of Corporación Minera Dominicana, by Perilya, the $50 million Dominican expansion by Sol Meliá, the world's largest resort hotel company and the largest hotel chain in Spain, and international financing to the Sol Group for its purchase of 340 gas pumps in the Dominican Republic from Shell Oil. The AFD (the Groupe Agence Française de Développement, a bi-lateral development finance institution established in 1941 that works on behalf of the French government) financed a cardiovascular center for patients with limited income established by a foundation run by the Catholic Church, and the Eximbank financed a Dominican farming project, where poultry were security for the loan. In another significant transaction, credit was extended for an industrial park for textile companies, located on the Dominican-Haitian border, which was one of the first Dominican-Haitian-US financings following the Haitian earthquake.
Notable recent mergers and acquisitions included the Globestar takeover; the merger of the Alcatel and Lucent operations in the Dominican Republic; the $34 million acquisition by Svitzer Americas, a leading provider of salvage and towage marine services, of Caribbean Harbour Services / Fredrick Shad, a Dominican full-service maritime logistics company; and the €105 million joint venture between Portuguese conglomerate Grupo Visabeira and a Dominican company involving the construction of 'The Baseball City' in the Dominican Republic.
Bloomberg, the premier site for updated business news and financial information, has entered the Dominican market, as has the Chinese telecommunications equipment company Huawei, and Papelera Internacional, the largest manufacturer of paper products in Guatemala and a subsidiary of multinational Koch Industries. Moreover, the Columbus Network, a leading Caribbean telecommunications services provider has merged its operations with a regional company. The Associated Press has set up operations in the Dominican Republic, and the office supplies chain Office Depot, the luxury goods chain Salvatore Ferragamo, and the restaurant chains Johnny Rockets and Nathan's Famous all have established franchises in the country. Village Farms, producers and distributors of greenhouse grown, high quality hydroponic produce, has established a presence in the Dominican Republic - introducing a unique industry to the country which had not previously existed.