Reorienting Spain’s international financial pull


chinese-blackChinese investment in Spain is increasing dramatically with newly released figures showing 2015 to be a watershed year as investment last year was greater than the total invested in the previous five years.

In fact, 2015 more than doubled on the previous year which saw 845 million Euros come in as opposed to over 1880 million Euros last year. This massive up-swing has been on the cards for some time as China steadily increases its interests in Spain. Even in 2014 its investment was around 50 per cent more than it had been the previous year. And it was in 2014 that Spain really bounced back into the confidence of foreign investors, coming in 9th in the rankings of countries which attracted the largest amount of globalĀ investment.

This comes on the heels of news that Spain has won over German financial minds as an area of opportunity. In 2014 the country’s financial experts mostly saw the situation as either bad or very bad. But this year, 90 per cent of those surveyed said it had risen to good or satisfactory.

China is currently the world’s second largest economy and the only country in a position to replace the USA as number one in coming years.

HOW THE GROWTH HAPPENED

These findings have come from a recent report from Esade. From an almost standing start a few years ago, Chinese companies with a presence in Spain now number a total of 96.

The most prominent investment was 671 million Euros from Ginko Tree into Madrid Gas Network. This is in line with the fact that last year China invested more than 19 billion Euros in the energy sector.

This all harks back to 2009 when Chinese interest in Spanish companies began an embryonic journey. A billion dollar valuation investment was made that year when Unicom of China bought a single per cent of Telefonica. Since then investment has spread to the sectors of tourism, real estate and sports leisure.

Another interesting investment saw activity from Chinese group Ying Zhan which invested a figure of almost 1.4 million Euros in ACS, one of the better performing companies of the IBEX. And there was a significant move into Spanish football with Wanda investing 45 million Euros in Atletico Madrid.

INCREASED EXPECTATIONS

Onto tourism and the most notable acquisition there came from investor Jiangsu Pro which took on the Valparaiso hotel in Palma de Mallorca in 2014 for 48 million Euros. And contributing to the massive upsurge in 2015, Mandarin Oriental International teamed up with Arab group Olayan to buy into the Hotel Ritz Madrid at a price of 130 million Euros. Continuing the theme, Chinese group NHA expanded on its 2013 20 per cent stake in NH Hotels.

Yet, despite all this activity, China’s exposure in Spain is still relatively small. For example, its investment in Italy exceeds 15 billion Euros and in Portugal comes to around 6.7 billion. The relatively low numbers in Spain are as a result of Chinese investment there being quite a recent development as it eyed other European countries first.

Esade explains China’s interest in Spain saying, ‘The economic crisis suffered especially by the countries of southern Europe has provided [big opportunities] for foreign investors.”

According to the report, the forecast for next year is that there will be a growth in the number of established companies in Spain and it is also expected that the graph will continue to rise steadily with Spain being seen as a great trading partner.

For more information, please contact corporate law firm Argali Abogados.

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