The appetite of sovereign funds for Spain is far from weakening. The purchases of these investment giants, which are dedicated to channeling the public savings of several countries—many of them oil and gas producers—closed last year at record levels: 11 operations (as many as at the peak in 2014) valued at 2.9 billion (as much as in 2009, when Abu Dhabi landed in Cepsa), according to data released this Thursday by the Foreign Trade Institute (ICEX, public) and the Business Institute (IE, a private business school). The “robust” growth pattern also continued in the first four months of 2023, as far as statistics go.
Although Spain’s figures are significant, they are still far from the main investment destinations for sovereign funds on a global scale. The United States was once again the country that attracts the most money from these investment vehicles: 55 billion dollars (52 billion euros) in 2022, 58% of the world total. The United Kingdom was second, with 13.5%, followed by India (8.2%), Saudi Arabia (2.9%) and Germany (2.7%). In absolute terms, the investment figure in these four countries was around 43 billion, with the real estate, healthcare, financial and information technology sectors—respectively—as the main destinations.
Assets under the umbrella of sovereign funds grew by 11%, going from just under 9.9 to 11 trillion euros, about seven times Spain’s GDP. To a large extent, this increase responds to the good progress of the fossil fuel business in the countries of the Middle East: the higher the sales price, the greater the resources to invest throughout the world and try to ensure their future when oil loses weight in the energy matrix. A moment that may be much closer than many believe.
In Spain, brick led the inflow of capital from sovereign funds last year. Largely due to the 1.5 billion euro operation announced by the Singaporean GIC in a future portfolio of 8,000 rental homes with Azora and which constitutes “the most significant investment by a foreign investor in this type of asset in the country.” ”, in the words of the authors of the report, Javier Capapé and Rodrigo Arce, both IE professors and specialists in sovereign funds.
Mubadala, the sovereign fund of Abu Dhabi and the largest shareholder of the oil company Cepsa (with 63%), has also joined this push for Spanish real estate, which in 2021 already took a stake of almost 50% in Healthcare Activos. and into which it has injected money again in recent months to accelerate its million-dollar growth plans: 1.5 billion over the next four years. This summer, Mubadala announced the purchase of 17 hotels in Spain for 600 million euros.
Outside of real estate, ICEX and IE technicians highlight GIC’s participation in the latest round of financing by the Spanish human resources firm Factorial, which has just received the unicorn label for exceeding $1 billion in valuation. Founded in 2016, it has been growing at triple digits for several years.
Summit in Madrid
The presentation of the report comes a few days after the main world association of sovereign wealth funds held its annual summit in Madrid, which brought together investment vehicles with more than five trillion euros in assets in the Spanish capital. “One of the objectives of sponsoring this meeting was to focus on Spain, a country that they know perfectly and that offers very great opportunities for them,” the Secretary of State for Commerce, Xiana Méndez, acknowledged this Thursday. “The majority of the world’s large sovereign funds are present in Spain and constitute a phenomenon of special relevance due to their ability to capitalize Spanish companies. An open economy like the Spanish one cannot be conceived without all this international investment,” she added.
The study also comes to light in the midst of the dust due to the entry of the first telecommunications company in Saudi Arabia (publicly owned) into the capital of Telefónica. Although this investment is not led by the sovereign fund of that country, it is one more example of the strength of petrodollars in Europe in general and in Spain in particular.
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