Spain Attracts M&A And Investment From Latin America

Spain Attracts M&A and Investment From Latin America

Spain Attracts M&A and Investment From Latin America

Spain invested heavily in Latin America when it suffered an economic crisis over a decade ago, buying up assets in banking, telecommunications, energy and infrastructure. Earnings growth at some of Spain’s top firms have long been driven by sound investments in countries like Mexico, Brazil and Argentina.

But the shoe is now on the other foot. Latin American investment in Spain is up as Spain’s wealthy cousins across the pond pursue M&A within the Iberian country, lured by the knock-down prices of a slew of first-rate companies hit by the global crisis.

And it is not just about reciprocity. These investors are also taking advantage of the historical and linguistic ties with Spain to gain a foothold in other European markets.

In January, Prime Minister Mariano Rajoy described Spain as the “doorway to Europe” for Latin American companies seeking to expand outside of their home market.

BRAZIL, MEXICO TOP INVESTORS

Brazilians with deep pockets have been busy in the Spanish real estate market,  where prices have plummeted since peaking late 2007 after a decade-long boom. Luxury coastal homes are on these investors’ buy lists.

Mexican investment funds have had a much wider reach in terms of their targets to include the banking, energy and transport sectors. Last month, transport group ADO bought Spain’s leading urban transport firm Avanza for around 800 million euros. The Avanza acquisition marks the start of ADO’s expansion into the European market.

Property investment fund Fibra Uno has also recently chosen Spain as its springboard to Europe,  buying 278 branches from Spanish lender Banco Sabadell for 300 million euros.

But it is not just private money from Mexico which has backed Spanish assets. State-owned oil company Pemex has had a decades-long relationship with oil and gas giant Repsol. In 2011, it raised its Repsol stake to nearly 10 percent from 4.8 per cent.

NOT SO SLIM PICKINGS

The driving force behind much of Mexico’s investment in Spain has been multi-millionaire Carlos Slim.

Recent reports point to Slim as a possible buyer of 3 percent of Gas Natural from Spanish savings bank La Caixa which, like many other Spanish banks, is under pressure to shrink its balance sheet. Slim already has a strategic alliance with La Caixa, including cross-shareholding with his financial subsidiary Inbursa. In 2012, the Mexican magnate acquired 439 bank branches from La Caixa for 400 million euros.

Buying into the Spanish football league is also on Slim’s wish list, and last year media reports pointed to his conglomerate Grupo Carso’s interest in cash-strapped football club Getafe.

For more information on M&A in Spain, contact corporate law firm Argali Abogados.

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