The data presented on Wednesday by the Spanish Venture Capital & Private Equity Association (ASCRI) show a total of €5,843.5M, made up of 670 investors, a record-breaking figure for the second year in a row. The fact that last year’s figure has been exceeded by 18% is proof of the strong dynamism that the private equity sector in Spain is experiencing.
For Miguel Zurita, the Ascri Chairman who has more than 30 years of experience in the sector, two consecutive years of record investment is “magnificent news”, not only for the private equity sector, but also for the Spanish economy as a whole. However, he highlights the high reliance that still exists on international managers and investors, which is why he believes it is “important to advance in the development of a competitive legal and fiscal framework with the rest of Europe” that facilitates access for national institutional investors to the “asset class”, and that allows the development and expansion of national managers.
Even so, and despite the many uncertainties in the economic panorama, fundamentally those due to Brexit, Zurita indicates that the Spanish framework of the sector “continues to be an attractive environment for investment”, both due to the level of entrepreneurship as well as regarding cost, since it is much more competitive. He adds that the distance that existed last year with other European countries has been reduced, placing Spain with growth above the EU average.
Depending on the type of investor, international funds continue to show significant interest in Spain. Foreign managers were responsible for 77% of the total investment amountafter participating in 118 investments, contributing 4,493 million Euro, 25% more than the previous year, also a record high. José Zudaire, Managing Director of Ascri, emphasized that in 2018 the number of associates rose by 32% in top firms, one third of which are made up of foreign managers. Zudaire states that last year new funds that had never invested in the country before arrived in Spain, which stabilizes the growth and development of the Spanish ecosystem.
Also, private national investors made a total of 454 investments, while national public investors made 98.
The middle market(medium operations ranging from 10 to 100 million Euro) also reached a record highin 2018, amounting to a total of 1,467 million in 56 operations, of which 44 were carried out by national entities. According to Zurita’s statements, the said “base” continues to be “well positioned”, boosted by the good health of both national private equity managers and Spanish companies.
Also, 8 “megadeals” (investments of more than 100 million) were made, amounting to 3,697 million (63% of the total amount), 3 of which exceeded 1,000 million.
With a volume of €417 million in a total of 510 operations, the investment of funds in Venture Capital remained high. International private funds closed 2018 with a record number of investments, 84 deals. Of the total operations, 340 investments were carried out by private national funds and 86 by public funds.
For Spanish Venture Capital & Private Equity as a whole, the sectors with the highest amount of investment captured were Energy and Natural Resources (20.4%), Hospitality/Leisure (17.9%) and Communications (17.8%). In terms of number of investments, the most significant sectors were Computing (46%), Consumer Products (9.1%) and Medicine/Health (7.2%).
As for fundraising, investment funds raised captured by private national investors, reached €2,515.3M, 17% more than in 2017. According to Zurita, this growth is further proof of the growing interest of institutions and is based on the attractiveness of the Spanish market. Furthermore, the investments closed by private capital in 2018 made up 90% and were in SMEs in the early and expansion phase.
On the other hand, the amount of disinvestment estimated for 2018 stood at 2,049 million Euro, after closing 295 operations, almost half of which (47%) corresponded to sales to another private equity entity, 24% to sales to an industrial investor and 22% was repurchased by shareholders.
According to Zudaire, “these data confirm the good health of the sector”, contributing in turn to the business sector in the form of employment generators and wealth creation for the economy as a whole. This industry is firmly committed to “being part of a code of good practices and being socially responsible,” adds the Managing Director.
It is due to all this that, although the figures collected today are provisional, since they have been closed a week before the start of 2019, “a radical change that could affect them to a great extent is not foreseen,” says Juan Leach, Vice Chairman of the Association. They remain confident in the development of positive dynamics in the Spanish market, being “prudent” in the investment corresponding “to the most cyclical sectors” for investment this new year.