Shifting environment presents the chance to unearth value and should pave the way to boost the number of mid-market deals.

By Manuel Deó

The Spanish M&A market in 2018 has been characterised by a series of large-cap transactions, helped by an abundance of cheap financing for the right deals. The total deal value on large-cap transactions in 2018, including ACS and Atlantia’s €32.1 billion takeover of Abertis, has already surpassed 2017 totals.

In the year to October, 772 transactions closed in Spain, compared to 791 in the same period last year. Yet, deal values totalled US$98.6 billion this year to October, dwarfing the US$36.7 billion total in the same period last year. IFM’s €2.16 billion acquisition of OHL Group’s concession business, which closed in April, was just one of several significant buyouts in a country known for mid-market M&A.

Buyers scouring the market for consolidation opportunities in 2018 have been particularly active in real estate, energy, healthcare, and infrastructure sectors. While Spain has enjoyed a host of deals above the €1 billion mark, the mid-cap market remains healthy with abundant opportunities likely to appear over the next 12 months. Sellers want to transact quickly, and there is strong competition for each asset.

Pressure to put dry powder to work will likely lead to bigger and bolder PE transactions in the year to come.

By Manuel Deó

Spanish private equity (PE) houses are sitting on large piles of dry powder as they scour the Spanish market for investment opportunities, as is the case in much of Europe. According to Pitchbook, total deal value has decreased by 15.3% compared to the same period in 2017.

This dry powder will not simply disappear. The pressure to put that money to work will likely lead to bigger and bolder PE transactions in the year to come, as PE firms take on more ambitious targets across the country. PE firms will need to source more off-market deals and corporate carve-outs in 2019. These transactions will likely be more common in the next few months as PE firms continue to operate in a competitive sellers’ market.

Limited partners will put more pressure on PE firms to generate returns, inevitably leading to more headline-grabbing buyout attempts. The greater capital needs of larger deal sizes likely will fuel a revival of consortium deals, in which two or more sponsors pool their resources as co-investors. An uptick in consortium-led deals can be positive for corporate boards and senior management, because such deals widen the range of possible investor structures, and deepen the pool of accessible capital and expertise to enhance shareholder value.

By Paul Davies and Rosa Espin

Spain is leading the fight against climate change with a proposed new Climate Change and Energy Transition Law.

The Spanish government regards climate change as one of the greatest challenges facing the country. Since 22 April 2016, the Paris Agreement (which sets out a global action plan to avoid climate change by limiting global warning to well below 2ºC), has been open for signature. Spain formally ratified the Paris Agreement in early 2017 and must now seek to implement measures to achieve the ambitious targets that it faces.

As an important consequence of these targets, in December last year the Spanish Climate Change Commission passed a proposal which urged the Government to develop a draft law on Climate Change and Energy Transition. This draft law will enable Spain to achieve its climate change and energy goals and promote competitiveness in the country. This proposed law is expected to regulate existing and future climate related measures, taking into account the climate change targets for the years 2030 and 2050.