11/08/2021 at 08:39 CET

Araceli Munoz

“Spain is probably one of the most dynamic economies in the European Union. If you look at the world of infrastructure, this is one of the big hotbeds of international funds. We like the fact that Spain is very receptive to foreign investment and has excellent management teams, ” argued Adebayo O. Ongulesi, chairman of the manager Global Infrastructure Partners (GIP), during his keynote address this week. last at the XX Congress of Cede. The opinion of this fund, known for having forged alliances with renowned Spanish companies such as ACS and being a shareholder of Naturgy, perfectly reflects the commitment of infrastructure funds in Spain, where they increased their investment during the pandemic to mobilize more than € 15.1 billion. Infrastructures (telecommunications towers, photovoltaic power plants or hospitals, among others) have established themselves as one of the most sought-after assets by investors around the world in the midst of the pandemic, by showing its resilience facing the vagaries of the global economy. Concretely, they are rather assets with recurring income over time thanks to long-term contracts, which offer great visibility on future cash flows and which offer higher profitability than other traditional assets such as fixed income securities, stock markets or real estate. Thus, they are able to offer investors returns of between 15 and 20% in the case of greenfield projects (those that are not yet built) or of the order of 7% in brownfield assets (those that are already operating). .

In Spain, funds specializing in infrastructure have carried out such notorious operations in recent months, such as the takeover bids of MásMóvil, Euskaltel or Solarpack, the takeover of 10.83% of Naturgy, the takeover of the former solar activity of Isolux or again the buyout of part of the concession activities of Acciona or FCC, among others. These investors saw Spain as one of the best destinations to invest in Europe due to the regulatory stability of the companies in which they operate, but also the wide variety of assets that exist in the country: from the most mature to projects under development. It is more, the investment fever for this company has reached such a point that many financial institutions offer it within its portfolio of private banking products, democratize access to this type of asset to a profile of investors with savings available to invest without having significant equity capital. Insurers and pension funds around the world are also increasing their contributions to this type of investment, which year after year is reaching record numbers worldwide. This increased competition has, in turn, caused a general rise in the price of the assets they pay, leading to real competitive bidding wars, especially in certain business niches.

In this sense, in recent years there has been a change of strategy of these investors, who during their early years in Spain focused particularly on the toll motorway business. However, the new road plan proposed by the Government has led infrastructure investors not to want to participate in projects of these characteristics, considering that they offer too low a profitability (around 2%) to be worth the trouble. ways. An opinion also shared by traditional companies in the construction and infrastructure sector. Faced with this situation, the pandemic has accelerated its engagement in the world of telecommunications and renewable energies, at a time when the arrival of European funds will promote projects linked to new technologies such as 5G or the decarbonization of the economy and for which it will take a lot of private capital to get them started. A clear case is that of MásMóvil or Euskaltel, which thanks to their new owners (KKR, Cinven and Providence) will accelerate the deployment of 5G; or Ence which, thanks to the sale of 49% of its renewable activity to the Ancala fund, will accelerate the development of its clean energy projects.

Telecommunications, a booming sector

Regarding the world of telecommunications, the experts consulted by ‘El Periódico de España’, claim that this type of investor can accelerate the concentration of the sector in Spain, a trend that can also be observed on the Old Continent, as evidenced by the merger O2 with Virgin Media (Liberty) in the UK. In addition, the growing number of low-cost operators is putting many traditional telecommunications companies on the back burner, forcing them to look for alternatives to reduce their debt or stay competitive. Thus, the forecast of these experts is that the operations of partial sale of assets (as Telefónica has done in Latin America), the introduction of financial partners for the deployment of new networks (such as Euskaltel) or the creation of subsidiaries of telecommunications towers to bring them to the stock exchange (as planned by Vodafone) or their transfer to a third party will continue to increase in the coming months. At present, many funds are already working on operations for the coming months: the entry of a minority partner in Reintel (fiber of Red Eléctrica), the sale of Lyntia (the former telecommunications subsidiary of Gas Natural ) or Avatel (fifth fiber optic operator in Spain), among others.