Mexican and Venezuelan investors are eyeing deals in the Spanish industrial, financial and real estate sectors as well as entering the UK and French markets
Latin American investors are showing a greater appetite for investment in Spain, as well as other countries in Europe, according to Ramón Hermosilla, president of Ontier Spain.
From which countries is the investment coming from? Hermosilla highlights investors from Mexico and Venezuela as being particularly active, with Mexican investors keen on deals in the industrial sector and Venezuelan companies targeting the financial and real estate sectors.
There has been a major rise in the number of M&A deals in the last year and a half and this is a trend that is expected to continue. In addition to concluded deals, Latin American investors have also been scoping out a considerable number of further investments that are expected to be finalised later this year. In addition to using law firms to conduct due diligence exercises, clients are also requesting that firms find them suitable partners to manage their investments.
While Spain has been the scene of a number of acquisitions by Latin American companies in recent months, another significant factor is that investors are increasingly seeing the country as a gateway to investment elsewhere in Europe, such as in the UK and France, for example.
Boosted by improving economic prospects at home, Latin American investors are eager to capitalise on opportunities in the Spanish market, which currently offers considerable value in terms of potential acquisitions. “The Latin American economy is doing well and, due to the economic crisis, there are lot of assets available in Spain at cheap prices,” Hermosilla says. He adds that some Spanish companies have big debts and need refinancing, while others are looking for partners with whom to develop their business.
According to Hermosilla, M&A deals have increased significantly in the last 18 months, particularly in Spain. Meanwhile, there are large number of deals in the pipeline that have yet to be concluded. Hermosilla says there has been more activity than transactions in the last few months in the sense that companies have been carrying out due diligence on potential acquisitions without actually finalising deals. Despite this, he says that he expects many transactions to close in the latter part of this year.
What are the biggest challenges for Latin American investors in Spain? Hermosilla explains that, as is the case elsewhere in Europe, clients frequently seek guidance in relation to understanding the legislative framework, as well as the relevant regulations and tax framework. Another concern for clients is ensuring that there and asset they do acquire is then managed properly. “Investors need someone to manage their investment, so they need to find the right partner,” Hermosilla says.
Spain: Gateway to Europe
Spain has another important role to play with regard to Latin American investment flows. Hermosilla says that, in the same way that European investors use Spain as a bridge to Latin American, Latin American investors are using Spain as a gateway to Europe. “Latin American companies have done some investment in London, particularly in the real estate sector, as well as in the European energy market.”
France, in particular, is a country that has been generating significant interest among investors. Hermosilla says companies have been concluding deals in the French telecoms and entertainment markets, in the latter case the transactions have centred on assets like theatres and cinemas. “There are so many things going round, there is a lot of money to be invested,” he says.
According to Hermosilla, in response to the growing interest from Latin American companies with regard to investment in Europe, the challenge for Ontier is to boost its European network. However, he acknowledges that this is not an easy task as potential partner law firms have to be selected carefully. “Europe is a very mature market and it can be difficult to find the right partner.”