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Private equity funds targeting mid-sized Spanish consumer businesses
Spain witnessing surge of investment in mid-market companies as private equity funds in fundraising mode aim to show their investors they can create wealth
Spain is experiencing a surge in investment in mid-sized companies with private equity funds targeting sectors including foods , consumer and pharmaceuticals , lawyers say .
Fund managers now view midmarket companies in Spain as a very attractive proposition . For example , earlier this year it was announced that Abac Solutions Manager had raised € 320m for its debut fund Abac Solutions , which will focus on backing “ midmarket companies in Spain ”. Investors in the fund include pension funds , endowments , financial institutions , fund of funds and family offices . Abac was advised by King & Wood Mallesons on the matter .
Linklaters partner Alejandro Ortiz says there has been a surge in midsize investment activity over the last eighteen months , particularly in the foods , consumer , pharmaceutical and healthcare sectors , as well as infrastructure and renewable energy . One such deal was US private equity fund The Carlyle Group acquiring a majority stake in the Spanish food producer Palacios Alimentación .
In addition , Ortiz highlights other sectors that are being targeted by private equity funds for mid-sized investments . “ There are private equity funds that are seeking to build portfolios in sectors such as energy , with smaller assets ,” he says .
Ortiz adds that , despite the political uncertainty in Spain , investor appetite for acquiring assets in the country remains strong . “ A lot of our clients have considerable interest in Spain – investors are focused on successful companies that have been able to come out of the crisis ,” he says .
Allen & Overy partner Iñigo del Val says there is significant mid-market activity involving private equity funds . He highlights sectors such as healthcare , energy and infrastructure and telecommunications as generating a high level of interest . “ A lot of private equity firms are in a fundraising phase and need to show their investors that they have the capacity to create wealth ,” he adds . The consumer products sector is also being eyed by investors . Recent deals included Nazca Capital ’ s acquisition of a 75 per cent stake in Spanish household product container manufacturer Caiba . Uría Menéndez advised Nazca Capital on the deal , while the vendors , the Baños Family , was advised by BDO and Grant Thornton . Allen & Overy advised Oquendo in relation to the financing of the transaction .
Fewer distressed deals Del Val says that , in the last two years , there have been “ fewer distressed deals in Spain ” and more international investment in “ what are perceived as growth sectors , such as infrastructure and renewable energy ”. He adds : “ The majority of
Spanish private equity funds target local firms with an international reach , ones that are present in Latin America for example , or are targeting Latin American firms that could be a good investment for the companies in their portfolio in Spain .” Del Val says US-based private equity funds are also very interested in Spain .
Low interest rates are driving M & A deals in Spain , which is now no longer seen as a highrisk market , according to Del Val . However , he adds : “ There
Alejandro Ortiz , Linklaters
was an acceleration of deals in 2014 and 2015 , but certain macro uncertainties , such as Brexit and the political instability in Spain , have cooled things a little .” Del Val says political uncertainty in Spain surrounding the failure of the countries ’ main political parties to form a government has had an effect on deal numbers , but that , after such a long time without a stable government , the situation has become ‘ the new normal .’
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• IBERIAN LAWYER • September / October 2016 www . iberianlawyer . com