Perspectives
7 May 2024
Decarbonisation, digitalisation and demographic change are reshaping Spain’s economy and society, demanding new investment in renewable energy, digital assets and social and transport infrastructure.
The country’s transition towards a more sustainable economy, and its efforts to maximise the benefits of the digital transformation, present an opportunity to stimulate economic growth in Europe’s sixth largest economy.1 However, this requires considerable financial investment, and despite substantial funds flowing from the European Union, there’s a significant role for international investors to play.
Macquarie, which has been investing in Spain since 2004, sees enormous and growing opportunities in its infrastructure and energy sectors.
“Spain is open for business,” says Juan Caño, a Managing Director at Macquarie Asset Management.
Acutely aware that its current economy is not sufficient to meet the capital investment required to update and expand its infrastructure, it remains very open to foreign capital.”
Juan Caño
Managing Director
Macquarie Asset Management
With growing confidence in the speed at which renewable energy technologies and infrastructure can be deployed locally, Spain has strengthened the ambition of its climate change targets – committing to reduce emissions by 32 per cent by 2030 from 1990 levels.2
On the digital front, the country’s Digital Spain plan anticipates universal access to fibre broadband by 2025 while promoting 5G technology, digitalising public services, and supporting the adoption of technology by small and medium-sized enterprises (SMEs).3
To help meet its climate and digitalisation goals, the country is set to receive tens of billions of euros of European Union investment. This includes €80 billion in grants and €83 billion in loans under the NextGenerationEU and REPowerEU programmes.4 “These funds will help to underpin the required massive investment in the country’s infrastructure,” says Caño.
At the same time, Spanish society is changing. With around 48 million people, Spain is one of Europe’s most populous countries.5 It also has the region’s longest life expectancy. But, with more than 20 per cent of the population aged over 65 today and this number set to grow in the years ahead, the delivery of key public services like healthcare will need transforming to meet changing community needs.6
Juan Caño, Salvador Rodrigo Duran and Miguel Palacio Hurle reflect on the business’ longstanding commitment to the country through our capital, asset management, and commodities and global markets businesses
This year, Macquarie marks two decades of experience investing in Spain.
Its first investment in the country’s infrastructure was in the operation and development of Spanish motorways with an investment in Cintra. Macquarie’s activity in the country increased markedly in the years that followed, with the opening of an office in Madrid in 2010 and the landmark acquisition of E.ON’s integrated electricity businesses in Spain and Portugal in 2014.
“That was the beginning of a sequence of transactions we made over the rest of the decade,” Caño says. “We had established our brand in Spain and our partners began to better understand the types of solutions we could offer them,” he adds.
Since then, through its Macquarie Asset Management business, Macquarie has been investing local and international capital on behalf of its clients to support a range of Spanish companies, including:
Through its Green Investments team, Macquarie Asset Management has been supporting local solar power generation through its European solar platform, Cero Generation.
“Cero is currently developing several projects across Spain, with a pipeline of around 2.5 gigawatts of capacity – enough to power the equivalent of over half a million homes,”8 Caño comments.
As well as investing on behalf of institutional funds, Macquarie is deploying its balance sheet via Macquarie Capital to help develop earlier-stage businesses in digital infrastructure and the energy transition across Spain. It is also backing social and economic infrastructure, by investing in sectors such as transport, logistics, education and healthcare and connecting international investors to opportunities across the country.
Macquarie Capital tends to invest at an earlier stage in the investment lifecycle, explains Pablo Riestra, a Senior Vice President in Macquarie Capital’s infrastructure and energy principal investing business. His team has greater flexibility in how it deploys capital “we use our own capital to create, grow and develop infrastructure, usually in partnership with financial or industrial partners,” he adds.
An example of this in action is the development of Spain’s first independent fibre network operator, Onivia. In 2019, Macquarie Capital created the company with its acquisition of a fibre-to-home network connecting 1 million homes from Spanish telecoms firm MásMóvil. Riestra comments, “We have been growing the business since, using our flexible balance sheet, and bringing in co-investment partners.” This has helped to build a business which is now Spain’s largest independent wholesale fibre platform, with coverage to reach around 10 million households across the country.
Macquarie is also active in bringing international private equity investors into Spain, says Salvador Rodrigo Duran, a Managing Director in Macquarie Capital’s advisory business. He identifies two parts of the market that are proving attractive to private capital. The first is mid-market firms looking for investment for their next stage of growth. “The local private equity firms have done their work in creating very good platforms that are now of a size where they need an additional source of capital,” he says.
The second is Spain’s “huge network of family-owned SMEs” that need to go abroad to raise capital for expansion. He says that a lot of European mid-market private equity firms are coming to Spain to invest and are looking for local expertise.
As an advisor, you need both sectoral expertise and a regional presence. You need to understand the local market and work with Spanish clients in Spanish – it’s important in the mid-size market.”
Salvador Rodrigo Duran
Managing Director
Macquarie Capital
As well as helping international investors enter the Spanish market, Macquarie’s offering in Spain helps connect local clients with its international hedging and financing capabilities. In the financial markets sector, the Commodities and Global Markets business provides hedging solutions on FX and Rates as well as structured lending, securitisation and distribution services to Spanish corporates, institutional clients, non-Bank lending platforms and football clubs across the country.
“We are now expanding our FX and Rates expertise and market capabilities in the mid-cap sector with sponsors, private equity firms and institutional clients across energy, infrastructure and commodities” says Miguel Palacio Hurle, a Managing Director in Commodities and Global Markets.
“We also offer bespoke financing structures which are innovative and flexible,” adds Ezequiel Weppler, a Managing Director in Commodities and Global Markets. Acknowledging the team’s ability to finance a range of portfolios of real and financial assets including autos, residential mortgages, real estate and SME’s loans via securitisation, warehousing, seasoning and term financing facilities.
An example, of a novel piece of financing recently structured by the Commodities and Global Markets securitisation team was a €150 million Senior warehousing facility for a real estate fund that was acquiring and renovating single dwelling units for the specific purpose of affordable rental living across Spain. By pre-agreeing an underwriting criteria for the properties and tenants, the fund could draw on the financing to purchase properties without incurring the added cost and time of negotiating a mortgage with a standard bank. “This provides the sponsor with certainty and speed to execute their portfolio’s growth plans, bringing newly renovated housing into the Spanish market at competitive rental rates,” says Weppler.
Key to Macquarie’s success in Spain, says Caño, is its willingness to partner to develop and grow infrastructure. “We like to develop infrastructure in partnership – whether with financial partners, or with industrial partners. They bring technical knowledge of how the business works, while we bring our expertise in active management of infrastructure, advice on energy transition pathways, capital deployment, and the ability to structure and finance the transaction.”
“That sets us apart,” he says.
Looking ahead, Macquarie’s EMEA Chief Executive, Paul Plewman, concludes “We are well-positioned to continue our growth and uncover opportunities in the Spanish market in the areas set to reshape the economy – decarbonisation, digitalisation and demographic change.”
Macquarie’s three global operating businesses offer services to clients in Spain:
*Commodities and Global Markets currently operates in Spain via Macquarie Bank Europe DAC (MBE) under the passporting regime and Macquarie Bank Limited (MBL) for physically settled gas and power.
