22 October 2019

Internationalisation and new investment strategies: the greatest challenges of the private equity sector in Spain

Internationalisation and opening new strategic lines of investment. These are the two greatest challenges that the Spanish private equity sector must face in the short term according to conclusions drawn from XX Annual Seminar on Private Equity organised by King & Wood Mallesons. Celebrated under the title “Trends and challenges of the private equity sector in Spain. Main issues in the short term”, the event was attended by Jaime Hernández Soto, Founding Partner of MCH Private Equity, Íñigo Sánchez-Asiaín, Founding Partner of Portobello Capital, Winnie Wutte, Founding Partner of Asterion Industrial Partners and Isabel Rodríguez, Partner of Funds at King & Wood Mallesons.

Regarding the opening of new investment strategies, Isabel Rodríguez explained that “perfectly distinct strategies can coexist under the same management as long as there is a clear focus, the global strategy of both management and the fund is well-defined, and the teams are sufficiently solvent to cover all eventualities that might arise.” This idea of professionalism and experience in the teams was emphasised by all speakers. Jaime Hernández Soto indicated in his speech that “being able to explain to potential investors you have the right team to carry out a specific strategy is key to earning their trust.”

While Winnie Wutte pointed out that “management teams assume the administration of investments made by third parties and act in different markets to meet the demands of all their customers. Great professionalism and ethically impeccable performance are therefore a given.”

Opening to new markets

All of the speakers agreed that internationalisation continues to be one of the unresolved matters of the private equity sector in Spain, and that undoubtedly, it will be an ongoing challenge over the next few years. Íñigo Sánchez-Asiaín explained that, although the internationalisation strategy is important, one must first gain the trust of investors. This is again achieved through a good track record from the management team and knowing how to transmit the added value brought by internationalisation. 

Jaime Hernández Soto highlighted that “approaching a foreign country solely from Spain, without having people on the ground can be complicated. It is certainly a step that can be taken, but with prudence and keeping in mind that the capacity of local execution is very important.

Private Equity in Spain: a mature sector

As with previous instalments of the event, all speakers agreed without a doubt, that private equity in Spain is a mature sector. As Isabel Rodríguez explained, in the last years a number of operations in the market have become established, allowing us to conclude that private equity now constitutes its own sector within Spain’s finance industry. It occupies a key and undisputed position within the business of bank disintermediation.

Managements and funds in the country have acquired a high level of sophistication and maturity. They deal with such a great volume of business that, in the words of Isabel, “proves the business has matured, consolidated, and is here to stay and play a key role in the coming years.”

Significant economic and social impact

The seminar this year had the privilege of participation from José Carlos García de Quevedo, President of the Instituto de Crédito Oficial (ICO), who brought the event to a close. As García de Quevedo explained, a recent report by the ICO about the valuation of economic and social impact of private equity in Spain detailed the advantage experienced by  companies who received funds from private equity compared to those who did not. On average, these companies recorded 18% more turnover, 30% more employment and 4% more benefits – undoubtedly success from private equity. 

The President of ICO also indicated that, in Spain, the stock of assets under management in the sector amounts to €27,500 million, of which approximately half is from international investors. The growing importance of international investors was also highlighted by Isabel Rodríguez, who pointed out that in the last year, there has been a rise in the number of international funds investing in Spain. 

Impressive attendance from professionals of the sector

The event was attended by more than 130 professionals in the sector. Some private equity firms, among others, included Alantra, Arcano Partners, Artá Capital, Asterion Industrial Partners, Capzanine, Corpfin Capital, Embarcadero Private Equity, GED Capital, GPF Capital, Magnum Industrial Partners, MCH Private Equity, Moira Capital Partners, Nexxus Iberia, Oquendo Capital, Portobello Capital, Qualitas Equity Partners, Seaya Ventures and Sherpa Capital.

In recent years, the Annual Seminar on Private Equity organised by the Funds team at King & Wood Mallesons has established itself as one of the industry’s benchmarks. Isabel Rodríguez highlighted the importance of the event as a meeting point for private equity professionals in Spain to “analyse the latest trends of the market, the challenges that are presented to us, and to study what may be going on in other countries.”

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