The Central Bank of Uruguay (BCU)concluded that “the activities and products offered and advertised by the firm Conexión Ganadera under the name Livestock Investment Contracts (fattening, livestock bonus and livestock pool) would be subsumed in a livestock capitalization contract.”
Therefore, “in the framework of the provisions of article 2 of Law 18,627, literal c of article 1 of the Compilation of Securities Market Regulations, and article 17 bis of Decree Law 15,322, they do not fall within any of the figures subject to regulation and supervision of the Superintendency of Financial Services”says the official resolution published on July 6.
Likewise, the BCU added that “considering the information provided by Conexión Ganadera and the changes proposed in the wording of the first and third clauses of the livestock investment contract (calves), It is concluded that the aforementioned activity, within the framework of the aforementioned regulations, would not be subject to the regulation and control of the Superintendency, ”said the Central, which considered the actions completed and filed the file.
A note from Blomberg reports this Friday that the investments in cattle launched by Conexión Ganadera and its competitors have become so popular, and the marketing tactics of some companies so aggressive, that the BCU began to investigate three years ago if they were offering unauthorized financial services. Even in February he warned the general public that companies offering investments in livestock were not subject to his supervision and control.
The company founded in 1999 and led by Pablo Carrasco manages some 120,000 cows on behalf of some 1,400 individual investors, most of them not cattle experts.
According to the US media, the firm has a waiting list of US$30 million to buy cows and a problem that it defines as “enviable”: finding land for grazing these animals.
Conexión Ganadera buys calves, steers and breeding cows on behalf of investors. It then rents the animals to cattle producers and pays the owner-investors a fixed annual income of 7% for calves and up to 11% for breeding cows, explains another part of the note.
At the end of the contract, usually between 6 and 24 months, investors recover their initial capital. The minimum investments range between US$15,000 and US$50,000, depending on the number and type of cattle, it is explained.
