In Spain, buyouts represent less than one-third of money put to work in the country, while growth capital accounts for two-thirds of investments, says Javier Loizaga of Mercapital. He predicts the Spanish market could double in the next three to five years, reaching E2 billion to E3 billion.
But he warns the wave of new players hoping to cash in on mega-deals that most of the opportunity is to be found in the mid-market, coming from family owners looking for partnerships to grow their businesses.
“None of the new players coming in has said, I will do growth deals.’ If you think private equity is interesting in Spain you have to believe in growth deals, because that’s the bulk of the market,” says Loizaga. He adds that many of the newcomers to Spain will have to wait to see any activity, as the boom in private equity isn’t going to happen as quickly as they expect.
Carlos Pazos, partner at SJ Berwin’s Madrid office, said recently that an anticipated boom in public-to-private activity is possible, following an amendment to the takeover code and companies act, which is due to come into force later this year. The amendment to the law, which has so far been restrictive, will eliminate anti-takeover laws.
“These measures are fundamental to generate a reshuffling in the sector of small and medium-listed companies,” says Pazos. There are around 400 companies listed on the stock exchange in Madrid and only 50 have a market cap above a few hundred million euros. This leaves anything between 100 and 300 companies with the potential for delisting. Whether this will spark a boom in Spanish public-to-privates remains to be seen.