Sovereign funds invested 6.9 billion euros in Spain in 2023, the second best year since Mubadala (one of Abu Dhabi’s investment arms) bought Cepsa in 2011. Sun and sand, renewable energy, telecommunications (due to the entry of Saudi Saudi in Telefónica) and padel are the main attractions of our country for these state funds, which increased the volume of assets they control by 13% throughout the world, to exceed 13 trillion dollars in total—eight times the GDP of our country.
Funds from the Middle East, Norway and Singapore carried out 13 transactions last year, highlighting acquisitions in the hotel sector (mainly in Meliá) and in projects related to the energy transition (especially in Iberdrola).
Iberdrola
“Iberdrola has been extraordinarily active in establishing strategic alliances with sovereign funds,” highlights the Sovereign Funds Report developed by IE University in collaboration with ICEX-Invest in Spain, which was published this Tuesday. Iberdrola’s relationship with these state investors dates back to 2011, when Qatar Investment Authority (QIA) acquired 6% of the Spanish electricity company for 2 billion euros (QIA still controls 8.71% of its voting rights and remains its main shareholder).
In 2023, Iberdrola executed four relevant operations with three different sovereign funds. In January 2024, Norway’s sovereign wealth fund invested €307 million in the company to acquire a 49% stake in a portfolio of renewable assets in Spain and Portugal. “This investment is part of a broader partnership that we discussed last year, with the objective of investing more than 2,000 million euros in the next three years,” explains the report. “It includes onshore wind and solar photovoltaic projects totaling more than 1,300 MW, capable of supplying energy to more than 700,000 homes per year and avoiding more than 350,000 tons of CO2 emissions each year,” it continued.
Going back, the second agreement was signed within the framework of the COP28 global climate summit in Dubai, in December 2023. Iberdrola closed an agreement with Masdar (owned by Mubadala, ADNOC and Taqa, an energy company controlled by a subsidiary of ADQ, another Abu Dhabi sovereign fund) to “co-invest an impressive €15 billion in offshore wind energy and green hydrogen in Germany, the United Kingdom and the United States,” the report states. report from IE University and ICEX.
This co-investment agreement was preceded by the regulatory approval, in November 2023, of a €1.6 billion alliance with Masdar to co-invest in the ‘Baltic Eagle’ offshore wind farm, Germany’s second largest offshore wind project. Iberdrola will maintain a majority stake in the project while Masdar will retain 49% valued at 784 million euros.
In April 2023, through its Brazilian subsidiary Neoenergia, Iberdrola signed a strategic agreement with GIC (Singapore’s sovereign wealth fund) for the development of transmission networks in Brazil for $476 million. Both companies will co-invest in operating assets, 1,865 kilometers of transmission lines with an average concession term of 25 years. The alliance gives priority to GIC and the right to acquire a 50% interest in other assets under construction and operation spanning another 6,279 kilometers. GIC will have a 50% stake in the company, valued at €215 million.
Telephone
For its part, in September 2023 (a fairly active month in sovereign wealth funds in 2023), Saudi Telecom Company (STC), partially owned (64%) by the Saudi Arabian Public Investment Fund, bought a 9.9 stake. % in Telefónica for 2,100 million euros, becoming the shareholder with the greatest voting rights at that time. “In fact, STC’s investment has been divided into two parts: firstly, through the acquisition of shares representing 4.9% of Telefónica’s share capital, and secondly through the acquisition of financial instruments that confer economic exposure to another 5% of the share capital,” details the report.
This second tranche is pending regulatory approval. Since then, Criteria Caixa has increased its exposure to 10.01% and SEPI (State Industrial Participation Company) reached 10% in May 2024.
Tourism
“The real estate sector attracted some of the largest operations led by sovereign funds in Spain in the period January 2023-March 2024. Supported by the rebound experienced in the global tourism industry, sovereign funds continued to support one of the main elements of the Spanish economy. “, points out the report published this Wednesday.
“Spain consolidated post-pandemic trends with nearly 85 million international arrivals in 2023 alone, being the second most visited country worldwide. Reflecting this dynamism, hotel investment in Spain reached 4.25 billion euros in 2023, marking the second highest volume in the country’s history, surpassed only by the 4.8 billion euros recorded in 2018. In 2023, 171 hotels were sold (an increase of 29% year-on-year) and 21,748 rooms (22%), a significant increase compared to 2022”, breaks down the document.
Large portfolio transactions were the main protagonists, with a volume of 2.6 billion euros. “And within this category, sovereign funds are, in effect, sovereign. GIC from Singapore and ADIA from Abu Dhabi lead the group and confirm the internationalization of the Spanish hotel market, gaining global appeal. In September 2023, ADIA acquired 17 properties owned by Equity Inmuebles (hotel property firm of the founding families of Tryp) for an amount close to 600 million euros,” the report states.
In the first quarter of that year, Equity Inmuebles put the 17 assets up for sale, some 2,500 beds. Five of them operate under the Meliá brand, three under the Sol brand, eight operated under Tryp and the iconic ME Madrid Reina Victoria. The operation now authorized by Competition will allow Meliá to continue operating under the management of the 17 establishments in the Equity Inmuebles portfolio that it has leased since 2002. Additionally, ADIA purchased 51% of a second portfolio (Avenue Capital) partially controlled by subsidiaries related to Meliá in Mallorca (Magaluf). The transaction is valued at 250 million euros.
As a result of these successful transactions, ADIA and Meliá plan to create a joint company to manage these 24 hotels, hoping to reach a valuation of 1 billion euros. This strategy would include the renovation and repositioning of some of the assets, helping to modernize the hotel offer in Spain.
For its part, GIC was part of one of the significant movements in the European hotel market in October 2023. The Singaporean sovereign wealth fund acquired a 35% stake in Hotel Investment Partners (HIP), Blackstone’s hotel platform for the south of Europe. Originally founded by Alejandro Hernández-Puértolas and Banco Sabadell in 2015, Blackstone acquired HIP in 2017. Since then, Blackstone has invested more than €600 million in the platform, which now has a portfolio of 72 hotels in Spain, Greece, Italy and Portugal, with more than 21,000 rooms, operated under global brands such as Ritz-Carlton, Barceló, Meliá, Hyatt, Hilton, Ledra or Marriott. Blackstone will retain a majority stake of 65%.
Sport
In August 2023, Qatar Sports Investments (QSI), a wholly owned subsidiary of Qatar Investment Authority, and one of the world’s leading sports investment companies, and Damm, the Barcelona-based brewing company whose sports subsidiary Setpoint Events organizes the World Padel Tour (WPT) since 2013, reached an agreement for the acquisition of WPT by QSI.
Led by Nasser Al-Khelaifi, president of the Paris Saint Germain football club and CEO of beIN Media Group, QSI would have valued the transaction at at least 30 million euros, although the financial terms of the agreement were not disclosed. QSI launched a rival parallel competition to WPT known as Premier Padel in 2022. From February 2024, WPT ceased operations and Premier Padel took the lead. “The transaction shows the impressive growth and capillarity of a sport that has achieved multi-year broadcast agreements that cover more than 180 countries and reach more than 150 million homes. The inaugural season of Premier Padel 2022 attracted 23 million views on YouTube,” notes the report on sovereign funds.
Other operations in 2024
In February 2024, the Norwegian fund acquired a 2.6% stake in Wallbox, a Spanish ‘unicorn’ that manufactures chargers for electric vehicles and which began trading on the New York Stock Exchange in October 2021. “The company with “based in Barcelona has lost 93% of its market value since peaking in early 2022,” the report says.
During 2024, the Nordic country’s investment arm made several strategic adjustments to its Spanish investments, increasing its net participation by 5% in the banking sector (particularly in Unicaja, BBVA and CaixaBank) and by 49% in the energy sector ( particularly in Iberdrola and Repsol). The five largest positions of the Nordic investment giant are, as of June 2024, Iberdrola (2.6 billion euros), Inditex (1.5 billion euros), BBVA (1.4 billion euros), Santander (1.2 billion euros) and Repsol (837 million euros). The Norway fund has its largest positions (by voting shares) in Unicaja (7.7%, an extraordinarily high exposure to NBIM standards), Repsol (4.36%), Solaria (4.3%) , Cellnex (3.24%) and Iberdrola (3.15%).
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