Some of the main business movements of the last five years have had venture capital funds as protagonists. This is the case of the purchase of MásMóvil, the agreement to finance LaLiga, the acquisition of the gaming giant Cirsa, the taking of a stake in Cepsa or the consolidation of Spanish fertility clinics. These firms have been buying and selling companies for years in search of profitability that ultra-low interest rates did not offer. However, the trend now appears to be declining.
According to the latest report from the Association of Financial Markets of Europe (AFME), which is presented today, venture capital operations have reached 1,000 million euros in Spain in the first quarter of the year, compared to 3,700 million euros in the same period of the previous year. The drop is 44%.
The report places emphasis on the way in which companies, especially small and medium-sized ones, access financing, and cites the decline in the resources provided by venture capital as one of the factors that make it difficult to attract resources. It is not a dramatic factor because what is known as venture capital has actually gone from providing 2.1% to 1.1% of business financing.
The drop in activity in Spain of firms such as KKR, Cinven, Providence, Carlyle or Blackstone exceeds that recorded in the EU average, of 25%, or that of the United States, of 33%. However, AFME considers that Spain and Italy, as a matter of valuations, continue to be two countries with the greatest potential for this type of investors.
The report analyzes other ways of financing companies. IPO offers have fallen by 82% in Spain until June, to just 23 million, while capital increases increase by 70%, to 352 million, and bond issues increase by 34% , up to 6,000 million.
In its latest financial stability report, the Bank of Spain warns of the international risks surrounding non-bank financing. Private equity firms now have a “high degree of leverage” and there could be “spirals of highly discounted asset sales,” he says.
The vice president of the ECB, Luis de Guindos, has also warned this week of the increased risk around these firms.
