Foreign investment on the rise, with the eye of the “Asian Tiger” firmly set on Spain

Foreign investment on the rise, with the eye of the “Asian Tiger” firmly set on Spain

Between January and August 2013, foreigners ploughed nearly €19 billion in net direct investments into Spain, twice as much as they had in the same period a year earlier.

These foreign investments are welcome in a country emerging from a two-year recession as it narrows its public deficit, boosts competitiveness and struggles with a jobless rate of 25.98%.

 

Opening the “Gate” for further investors

 

Among the latest converts, Microsoft co-founder Bill Gates snapped up in September a 5% stake in Spanish construction and services group FCC for €108 million.

News of the US billionaire’s decision sent FCC stock surging more than 10% in a single day and made headlines in the Spanish media.

“Foreign investment is returning to Spain,” affirmed state secretary for business Jaime Garcia Legaz as he presented a report last month on sovereign funds by the Spanish business school ESADE.

“It is clear that the perception of Spain has changed. It is improving week by week.”

Other notable investments include:

  • Singaporean sovereign fund Temasek which has ploughed money into Repsol,
  • Abu Dhabi’s IPIC who is now the full owner of Spanish petroleum and gas group Cepsa.

 

The Asian Tiger

 

Asian funds especially from Singapore and China are emerging as the big investors in Spanish companies, a change from just two years ago when Arab funds, in particular Qatar Holdings, were the leaders.

Qatar Holdings took stakes of more than 6% in Banco Santander and energy group Iberdrola, spending more than $2 billion on each investment and it is now the main shareholder in Iberdrola with 8.18% of the company.

“Sovereign funds anticipated the return of foreign investors, betting on Spain since 2011,” said Antonio Hernandez, analyst at financial advisory group KPMG, predicting they would continue to do so in 2014.

The return of foreign investment to the Spanish shores via sovereign funds is great news.  This return in confidence in the Spanish economy is starting to show signs of improvement in the real estate market with foreign investors increasingly looking to investment in bricks and mortar properties in Spain.

Assaad Fakhry