Mexico leads ‘Reconquista’

Thursday, 09 January 2014 00:10 
BY TRACY RUCINSKI
AND ELINOR COMLAY
Reuters


MADRID/MEXICO CITY – As Spain’s economy begins to recover from a near-fatal crisis, Latin American companies and entrepreneurs are ahead of the pack in gaining a foothold from which they can grab a share of the spoils.

Mexicans, Venezuelans and others have moved into areas such as banking, travel, food and other consumer-orientated sectors.

Investors from Spain’s former colonies are also snapping up financially strained firms in “the Motherland” in need of liquidity boosts.

In recent surprise deals, Venezuelan bank Banesco won a bid for state-rescued lender NCG Banco with an offer of €1 billion. Peru-based Grupo Santo Domingo pledged €100 million as part of a wider capital injection in Spanish property firm Colonial.

“It’s a logical phenomenon,” said Enrique Quemada, head of Madrid-based MyA adviser ONEtoONE Capital Partners. “It’s now clear that Spain isn’t leaving the euro and the euro isn’t falling apart, so with a good price and a common language, it’s the natural gateway for large Latin American groups to enter Europe,” said Quemada, who has opened offices in Mexico and Peru to tap investor interest.

The recession created a wave of corporate bankruptcies and left one in four workers unemployed, and investment from abroad is key to securing a recovery and jobs growth in 2014. Even though Spain’s blue chip index is trading at 2.5 year highs, bankers said Spanish companies still offer attractive multiples versus their European peers.

The “Reconquista” has coincided with a rise in wealth in Latin America and particularly in Mexico, which has led to the string of Spanish acquisitions ranging from bank and food assets to buses and shipbuilding. Over the past six months, Mexican investors have taken stakes in banks Popular and Sabadell, meats processor Campofrio and transport company Avanza.

Spanish media predict a deeper partnership between Carlos Slim and La Caixa, which along with other Spanish savings banks is considering the sale of vast corporate stake holdings to meet stricter European capital rules.

Mexican Economy Minister Ildefonso Guajardo said the financial crisis had created opportunities for investors in Europe at a time when Mexican companies were already looking to expand their reach into the rest of the world. “Before, we only looked at attracting investment. Today Mexico is making record foreign investments,” he told Reuters.

Lured by a more stable legal and investment framework in Europe versus Latin America, large fortunes and family offices are using Spain as an entry point to the Old Continent.

The strong presence of Spanish banks such as BBVA and Santander in Latin America has also helped facilitate business.