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As Spain begins to turn the economic corner towards recovery the biggest international private equity investors are taking a hard look at making major investments there again. Direct investments in real estate, picking up distressed assets from the over-extended domestic Spanish banking system and significant minority investments in recovering public companies. These are all on the agenda now for your typical peripatetic private equity investor, someone who never sleeps but agnostically scours all corners of the globe looking for deals.
The Spanish online business website Elconfidencial.com reported yesterday that Spanish billionaire Esther Koplowitz could sell some of her stake in the holding company vehicle called “B-1998, ” through which she has controlled the publicly listed Spanish construction and engineering giant, Fomento de Construcciones y Contratas (FCC).
It is thought this might become part of a debt restructuring deal for the private holding company. Esther Koplowitz presently directly owns 89.7% of B-1998 herself, which, in turn, owns just over a 50% majority control position in FCC. According to corporate governance disclosures by FCC, the Spanish Bank Caixa also owns another 5% of B-1998, which it picked up in March of 2014 from another shareholder.
A source has said to Elconfidencial “It is true that there are refinancing negotiations that could involve the sale of part of the holding. There are talks with a lot of people, ” though the source apparently also asked not to be named due to the confidentiality of the process. This may perhaps be a polite way of disseminating the fact of such talks, and in a way that might indirectly encourage others to join in, too.
FCC shares later jumped yesterday on the speculation, rising by almost 5% to close at US$23.81 (Euros 17.64) per share. Today they are still close to this price, representing a market capitalisation of just over US$3 billion (Euros 2.25 billion).
Elconfidencial.com went further still on Thursday, implying that an investment vehicle led by George Soros, with other groups, were in talks with Koplowitz to invest in B-1998 as much as somewhere between US$540 and US$ US$810 million (Euros 400 million and 600 million) of new equity.
If the reports are accurate this would be a clever approach, as it could permit Esther Koplowitz to maintain control of FCC in conjunction with new partners, while simultaneously easing the pressure on some of the still heavy existing loan obligations of B-1998, much of which derives from the purchase she herself made of half of FCC from her sister Alicia Koplowitz, all the way back in 1998, and which now are thought to total over US$1.3 billion (Euros 800 million).
In late December 2013 Esther Koplowitz had already come to a positive agreement with her bankers to refinance all of B-1998’s debt, which was restructured and maturities pushed out again all the way to 2018.
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