International backers fuel record-breaking H1 in Spain

Amedeo Goria
30 August 2017

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In the first half of the year, Spanish private-equity-backed transactions reached their highest level ever recorded in value terms, paving the way for a buoyant end of the year. Amedeo Goria investigates the reasons behind recent investor appetite in the country

Spain witnessed a buoyant first semester in terms of aggregate value, with unquote" recording €8.2bn of private-equity-backed transactions between January and June 2017. This represents the highest total of capital ever deployed in the country across a six-month period, exceeding the €6.46bn watermark reached in the first semester of 2005. More strikingly still, this total is not far short of the two highest aggregate value figures seen across an entire year, specifically €8.36bn in 2007 and the peak of €12.3bn in 2005.

According to the local private equity and venture capital association Ascri, private equity fund managers wrote equity cheques totalling €3bn in H1 through 45 transactions. This is triple the amount of capital drawn down during the same period in 2016.

Making a big deal of it
This surge in value was partly driven by five deals with enterprise values of more than €500m: Hellman & Friedman led the acquisition of Allfunds Bank for €1.8bn alongside HarbourVest Partners and GIC; CVC Capital Partners acquired a 25% stake in oil transportation and storage business Compañia Logistica de Hidrocarburos for an estimated enterprise value in excess of €500m; KKR acquired a 40% stake in telecommunication and infrastructure company Telxius for €1.28bn; Towerbrook Capital Partners purchased an undisclosed stake in aerospace business Aernnova in an estimated €900m enterprise value deal; and Warburg Pincus bought Accelya, a provider of airline financial advisory services, from Chequers Capital for an estimated €650m.

Notably, all five deals were led by international sponsors. However, local GPs played a role in four of the five deals that took place within the €100-500m enterprise value range. MCH Private Equity and GPF Capital took part in the consortium led by Trilantic Capital Partners that acquired Pachá Group for €350m; Portobello Capital reinvested alongside CVC Capital Partners in Vitalia Home for €300m; ABAC Capital purchased a controlling stake in PronoKal Group in a €100m deal in April; and Aurica Capital backed the SBO of Flex Equipos de Descanso, acquiring a 13.1% stake for €39.2m in April. On the international sponsor front within the same value range, UK-based Providence Equity Partners acquired Nuovo Agora Centro De Estudios in a €350m SBO.

The €8.2bn of private-equity-backed transactions between January and June 2017 represents the highest total ever deployed in the country across a six-month period

Overall, 79% of the total private equity activity was driven by international GPs with €2.4bn of equity deployed, according to Ascri. The bulk of activity in volume terms is represented by deals in the €10-100m enterprise value range, according to unquote" data, with 26 transactions and an aggregate value of €934m.

The first half of the year was also relatively stable with regards to fundraising in the country. A total of €1.13bn of commitments were raised; a 4.6% dip compared to the first six months of 2016, but still the third highest figure since 2009. Furthermore, several private equity fund managers are currently in the market chasing capital, with Magnum Capital II launching in October 2014 with a €500m target and Artá Capital II, which has a €400m target, holding a €300m first close in August. Other funds currently raising commitments include Realza Capital II Fund and Nexxus Iberia Private Equity Fund I, both with a €200m target; Ged V Spain and Aurica III, with a €150m target; and Portobello Capital Fondo IV, which has a €600m hard-cap and is eyeing a final close by the end of summer.

Private equity fund managers can look with confidence to the second half of the year, with €2.7bn of capital already deployed in July. Prominent deals in H2 to date include the CVC Capital Partners- and PAI Partners-backed €1bn SBO of Cortefiel from Permira, Lone Star's €605m acquisition of Esmalglass and the estimated €550m BC Partners-backed MBO of Pronovias. Coupled with the healthy fundraising environment, the Spanish market appears well-placed to build on an impressive start to the year.