Record figures for venture capital

venture capitalVenture capital has had a great year in Spain which could see it hit record figures at a time when almost all major international funds have their investment focus placed in the country.

As of September 30, 13 investments in Spain exceeded 100 million with many large international funds having bought Spanish companies. This is being seen at a time when liquidity and easy credit have been driving activity in the sector.

EBITDA – that is Earnings Before Interest, Taxes, Depreciation and Amortization – is now at levels not seen since before the crisis.

Pre crisis cheer

According to data from venture capital association Ascri, low interest rates and better access to financing spurred investment from January to September to pre-crisis levels.

The good news here follows the promising start made by M&A in Spain with the number of mergers and acquisitions in the first half of 2017 increasing by 3.99 per cent on the same period of the previous year.

These conclusions were made last month when investment experts gathered at CapCorp, the congress for professionals of venture capital and M&A. It was organised by Ifaes and KPMG in collaboration with the Economist.

The president of Ascri and founding partner of Portobello Capital, Juan Luis Ramírez, said, “If we think that there is competition in Spain, what there is in Europe should be ‘hypercompetition.’ In the upper part of the market the prices are much larger, but in medium operations there are more options.”

Learning from history

However, many experts also warn of the similarities of this moment with the pre-crisis years and its consequences. Magnum partner Alberto Bermejo said he did see some parallels with the years before the crisis, such as financing conditions, debt ratios and covenants. However, he added, “[While there are] similar things, it’s not true that it means that it will be repeated again.”

Fernando Torrente, a partner at Allen & Overy and an M&A specialist, said that Spain currently shares many things with 2007. “We are in a moment of high liquidity and low interest rates that are being reproduced today with high multiples. This year is a very important moment. There is a lot of joy, but you have to look back to learn from mistakes.”

Regarding the search for operations, most people agreed on the preference for proprietary operations and avoiding the increase in auction prices.

For more information, please contact corporate law firm Argali Abogados

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