Mega deals have Spanish private equity sector on course for bumper year
Despite political and economic uncertainties, 2019 is once again proving to be a busy year for venture capital in Spain. The industry is experiencing an increase in mega deals, resources and growing competition in the context of high sales multiples and easy access to bank and/or alternative financing.
According to Capital & Corporate, a provider of Private Equity and M&A information in Spain, in the first nine months of 2019 venture capital has registered four megadeals which, taken together, add up to an investment volume of more than EUR4 billion. According to C&C, a total of 22 large operations reached EUR100 million by September.
The biggest deal to date is the acquisition by Catlye of a 37 per cent stake in Cepsa from Mubadala. The transaction, announced last April, valued the energy company at USD12 billion (about EUR10.9 billion), including debt. The transaction, driven by the Abu Dhabi sovereign wealth fund, was designed as a dual track from the outset, so it fluctuated from an IPO to a private sale at various times depending on the market and demand.
Bridgepoint's reinvestment in Dorna Sports, valued at more than EUR2 billion, is the next biggest deal to date. The hard-fought bid for the MotoGP World Championship organiser was settled with a reinvestment by the British private equity firm. After 13 years as a reference partner, Bridgepoint bought back the sports rights manager by selling it to itself and injecting more than EUR1 billion in the company. The purchase and sale between its own funds has allowed Bridgepoint to continue holding the asset in its portfolio.
The next biggest deal is PAI Partners’ purchase of the catering company Áreas from the French group Elior for EUR1.542 billion, bringing the headquarters of the company back to Barcelona. In fourth place, is the takeover of Universidad Alfonso X El Sabio by CVC, which valued the company at almost EUR1 billion (about 14x ebitda). The other major private equity investment in education this year was made by the British company Permira, which bought Laureate International Universities in Spain and Portugal (European University), injecting EUR400 million of equity into the company, which was valued at EUR750 million.
The polarisation of investments in a small number of large operations remains as one of the most remarkable trends of recent years. Furthermore, in 2019 the fund managers are tracking the Stock Exchange market – due to their attractive prices – with an important number of recent examples where private capital has focused on listed companies: Cepsa (Carlyle), Parques Reunidos (EQT), Telepizza (KKR) and Natra (Investindustrial).
C&C has also noticed the dynamism of private equity investment in infrastructure (Infrastructure Private Equity) and real estate (Private Equity Real Estate). In particular, investor interest in Spain has also been demonstrated by large investments made by fund managers through their specialised funds in these areas. This is the case of the above mentioned takeover of Parques Reunidos by EQT, whose takeover bid – successfully completed through the EQT Infrastructure I fund – values 100 per cent of the leisure group at EUR1.13 billion and represents the largest transaction to date by the Swedish fund manager in Spain. In the area of real estate, investments such as the purchase of the developer Isdin Residencial (Solvia Desarrollos Inmobiliarios) by Oaktree, valued at EUR882 million, stand out.
In short, despite the global uncertainty and the perception that a market correction is approaching, the industry is not showing signs of slowing down and is maintaining its good pace of investment, with figures pointing to another year of maximums exceeding EUR6 billion of investment.