New horizons for Spanish private equity

The Carlyle Group launches its fifth European office to tap opportunities amongst Spain's family businesses.

US-headquatered private equity firm, The Carlyle Group, has expanded its European presence by opening a Spanish operation, with offices in Barcelona and Madrid. It plans to focus on buyouts of leading family businesses.

Carlyle has been a ready participant in Europe for family business buyouts, having successfully partnered with family members in deals transacted in France, Germany and Italy. Examples include Honsel, the German automotive component manufacturer, Riello, the Italian maker of boilers and burners for heating, and the French newspaperLe Figaro.

The boom in family businesses first took place in Spain after the Civil War. More than sixty years on and the founders' children who are now running these businesses tend to have a far more sophisticated approach to financing than their parents did. There are also at times family members who want nothing to do with the business and therefore are actively seeking to be bought out.

The market for raising finance has also changed significantly in Spain in the last decade. Ten years ago there was very little leveraged finance available in the country and deals therefore had to be conducted by foreign banks outside Spain. Although leveraged finance by Spanish institutions is still rare, the foreign banks now have branches in Spain which makes it much easier to conduct a deal.

According to research conducted by the Spanish Private Equity Association, investment in Spanish companies by private equity funds rose by 55.9% last year reaching E1.17bn. It also revealed that the amount of capital raised for new funds tripled to E2.35bn.

Pedro de Esteban, Carlyle’s newly appointed managing director for buyouts in Spain, believes that in an increasingly open and competitive market “access to significant growth capital delivered through financing techniques will determine which companies can transform themselves from being national players to being global leaders in their sectors”.

He believes that the needs of a family business are very specific. “A strong partnership between investor and family members is key to ensuring that the objectives of both parties are met.”