TTR DealMaker Q&A with Allen & Overy Partner Ignacio Hornedo

Ignacio Hornedo is a partner within the corporate department at A&O Spain. His practice encompasses all aspects of corporate transactions including M&A, disposals, private equity, joint ventures, corporate reorganizations and commercial contracts. He regularly advises both listed and unlisted companies and acts for corporate purchasers, private equity bidders and financial advisors.

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TTR – How would you describe the M&A activity in Spain in 2019?

I. H. – It has been another strong year in terms of activity. While mega-deal volumes were slightly lower than the year before, we have experienced lots of activity in our key sectors such as private equity, energy, infrastructure and telecoms. PE houses continue to be fully-loaded and to seek investment opportunities, aiming at pre-empting processes to avoid the difficulties and uncertainties of an auction. Our starring PE practice has had another great year advising key players as EQT and ICG, supplemented by a very significant reach in the energy space: the renewables sector has shown real market heat with a lot of development projects now forming a sophisticated project-M&A market, where players are able to price the different stages of a project yet to be built. Foreign investors including German, French and Chinese energy players, as well as infrastructure funds, are looking for assets at development phases and they bring risk appetite and value-creation proposals to differentiate themselves.

TTR – How would you describe the relationship of the Spanish M&A market with its neighbouring countries?

I. H. – We compare more than well to our neighbour countries. Out of the Southern Europe jurisdictions, we are probably the most comparable one with the UK M&A style. We can confidently say that we are more flexible and simultaneoulsy more rigourous than our immediate neighbouring countries. In terms of trends, we do see now more interest in Portugal and we provide Iberian coverage to our international clients looking at particular assets there, specially in the energy and infrastructure sectors. 

TTR – What do you think about the performance of Private Equity and Venture Capital segments in 2019 in Spain?

I. H. – Private Equity houses are all over the place and the vast liquidity pushes a fierce competition also with more sector strategic investors. Transactions as the sale of BT España evidence that -for a while now- PE houses compete in equal terms with industrial players.  

TTR – Real Estate is again the most targeted sector in the year, why do you think is that?

I. H. – Assets have still benefitted from the post-crisis price adjustment and the usual suspects on REOs acquisitions are more and more sophisticated in their valuation mechanisms. We are now starting to see these key players turning their strategy in Spain to rotating their portfolios, with their investment teams turning sight to other jurisdictions. Certainly the next big thing in real estate is all the Madrid Nuevo Norte project, where the leading characters are positioning themselves towards investors’ interest in the short to mid term. 

TTR – What can we expect to happen in the Spanish M&A market in 2020?

I. H. – We expect 2020 to continue with strong levels of activity. While political uncertainties continue to be a top concern for any Investment Committee and the new government is yet to be assessed, the vast liquidity keeps pushing the market forward. Renewable assets continue to attract foreign investment interest. Large corporates who are key players in other energy sources are now deploying large amounts of capitals to build green energy platforms. This trend will continue to incentivise assets’ development activity, market consolidation for operating plants and more and more transactions. It is yet to be seen how the market absorbs the enormous interest of all kind of investors, some of which may face difficulties if projects in their initial phases do not reach the relevant milestones at the expected pace.