Spanish companies are trying to overcome the devastating effects that the coronavirus pandemic is having on their accounts. The stock market crash has left a large number of listed companies within takeover, but outside the listed markets the outlook is not much better. Solvency problems are leading many companies to a compromised situation and all this is the ideal breeding ground for rival companies, investment funds and venture capital firms be on the lookout for attractive trades.
According to the data obtained by ASCRI (Spanish Association of Capital, Growth and Investment), the volume of investment in the Spanish market reached 3,712 million euros until September 30, 2020. By type of investor, international funds were responsible for 80% of the total invested, compared to 18.8% of private national investors and 2% of public national investors.
However, activity could be higher in the coming months. Financial sources assure THE WORLD that lately they are receiving from the companies more sell orders than buy orders, which gives an idea of the search for alternatives in the face of difficulties.
The shot of oops
Up to 28 of the 35 companies that make up the Ibex 35 remain in Red in the annual balance, and of them, a total of seven (IAG, Banco Sabadell, Meliá Hotels, Repsol, Merlin Properties, Telefónica and Santander) have lost more than 50% of their value.
“Two of the companies that are in the eye of the large investment funds are Telefónica and Repsol. The former is above all because of the interest of the German telecommunications giant, Deutsche Telekom, while the oil company suffers on the stock market due to the drop in demand for crude worldwide, “says Diego Morín, market analyst at IG Markets.
MorÃn also points out the position of Merlin Properties, which a few months ago aroused the interest of the Canadian group Brookfield and from other funds without, until now, any of them having specified that interest in an offer.
However, one thing is that the capitalization of certain securities can be attractive and another thing is that it is easy to launch a takeover on them. In fact, the opposite is true. Among other things, because the Government activated a mechanism last March to shield Spanish listed companies from possible offers from outside the European Union. The Executive aimed precisely to prevent international investors from taking relevant positions in strategic companies in the country, taking advantage of the stock market crash due to the coronavirus.
“This mechanism has been positive and fundamental for the Government to achieve its objective. Without it, many more operations would have been seen in these months,” he says Anindya Saha, professor at EAE Business School and founding partner of Nero Ventures.
According to their analysis, the companies and assets related to the renewable energy, telecommunications, the financial sector and construction they are now the ones that arouse the most interest in large funds and investors. “In general, everything related to infrastructures”, he adds.
On prices, there is no clear perspective. In the words of Juan López del Alcázar, Partner responsible for Strategy and Transactions of EY, “Covid has radically shaken the game board. We are facing a highly uncertain scenario where forecasting the financial projections of companies is almost a science fiction exercise and where asset pricing is tremendously complex. this environment, the private equity is called to play an essential role in the capitalization of Spanish companies “.
Hotels
Outside of the listed markets, one of the sectors that is most closely watched is the hotelier. “As in all crises, investment opportunities are emerging for all those players that have liquidity. It has been a very hard summer for the tourism sector and the financial needs of the offer are beginning to be noticed despite the government’s aid “, he says Miquel Laborde, founding partner of Laborde Marcet, a Barcelona consultancy that manages assets and real estate investments.
“Operations that a year ago they would have been impossible, today they can be closed due to the impact of Covid-19 on the treasury of private owners or even large hotel chains “, he adds.
Based on their experience, and contrary to what might be thought, prices remain stable despite the new confinements. “Beyond Barcelona and Madrid, other real estate places such as Marbella, Málaga, Palma, Bilbao or San Sebastián are currently registering a notable increase in the interest of mutual funds and family offices, which try to acquire them at more competitive prices than before the pandemic, “he says.
According to the data compiled by the consultancy, the most sought-after asset is a hotel with 80 rooms with prices ranging between 200,000 and 600,000 euros per room, depending on its location, which means that the total price of the operation ranges between 15 and 50 million euros. In arteries prime like Barcelona’s Paseo de Gracia or Madrid’s Gran Vía, the price per room is between 400,000 and 600,000 euros; in second lines, the price of the room falls to 300,000 euros, and in the first crown of the metropolitan area of large cities, it is 200,000 euros.
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