Bill Gates Backs Spain With Construction Investment

Bill Gates Backs Spain With Construction Investment

Bill Gates Backs Spain With Construction Investment

Fortune is smiling on Spanish construction company FCC – Microsoft co-founder Bill Gates has just become its second largest shareholder, buying a 6 per cent stake for 113.5 million euros.

The acquisition is welcome news for FCC, fighting to overhaul its business and return to profit after a construction and property crash five years ago. The firm’s biggest shareholder, with 53 per cent, is Esther Koplowitz, one of Spain’s wealthiest individuals and a philanthropist like Gates.

Gates’ investment in the builder is being hailed as more than just an interest in bricks and mortars. It is seen as a vote of confidence in the Spanish economy‘s ability to return to growth after a two-year recession.

Gross domestic product grew 0.1 per cent in the third quarter from the second, the Bank of Spain announced on Wednesday, marking the economy’s first expansion in nine quarters.

CONSTRUCTION EMERGES FROM THE DOLDRUMS

Financial services is a big investment theme for Bill Gates, with defensive consumer stocks and industrials also amongst his top buys. His investment strategy is long-term.

So has the US billionaire backed a winner with FCC? Gates’ choice of the construction sector for his maiden deal in Spain has raised some eyebrows. The industry became the symbol of the country’s crisis after expanding rapidly during a 10-year credit bonanza and property boom.

When boom went bust in 2008 and government spending on public works was slashed to reign in the deficit, builders and property developers were forced to refinance large debts. This sent a slew of companies into liquidation.

But the sector’s restructuring, plus a roughly 30-per cent drop in property prices since their peak, has rekindled investor interest and M&A.

Amancio Ortega – founder of Spanish retail giant Inditex – and Mexican tycoon Carlos Slim have invested in the real estate sector. And top investment funds like Blackstone have snapped up property and land assets at bargain prices, betting on a recovery.

CHANGING INVESTOR PERCEPTION TOWARDS SPAIN

Santander Bank chairman Emilio Botin said last week there has been a “drastic change” in perception towards Spain. He seems to be right – investor interest has remained strong this year for banking, property and tourism. Last year, Spain was the world’s 14th-ranked destination for foreign direct investment.

Spain’s Industry Minister, Jose Manuel Soria, told Spanish radio on Tuesday that Gates’ investment showed the country’s economy now generated “greater confidence and credibility.”

But for FCC, Gates’ endorsement is invaluable as it tackles tough negotiations with creditor banks to refinance about five billion euros of debt that falls due this year and next.

For information on investment opportunities in Spain, contact corporate law firm Argali Abogados.

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