Ignacio Hornedo, partner, Allen & Overy: ‘There´s fierce competition among private equity houses for good assets’

Private equity funds are targeting assets in the energy sector, especially renewables.

Posted Monday, February 8th 2021
Ignacio Hornedo, partner, Allen & Overy: ‘There´s fierce competition among private equity houses for good assets’

Ignacio Hornedo, partner, Allen & Overy

LEADERS LEAGUE: What has been driving demand for corporate/M&A lawyers in Spain in the last 12 months? 

Ignacio Hornedo: Private equity and renewables are kings. There’s still tons of liquidity as well as a fierce competition among private equity houses for good assets, with high prices in our opinion. In the renewables space, the M&A market remains hot on many different levels, from development projects to operational assets, as well as on arbitration claims acquisitions. We have seen CSP [concentrated solar power] taking the lead (for example, Torresol) and expect that to become a trend.

What impact has the global pandemic had on private equity activity?

Private equity activity did pause in Q2 due to valuation uncertainties. We saw a large number of deals suddenly stopping or freezing. But the summer brought us back on track; many projects were resumed and new opportunities arose, particularly in energy, but we have also seen flagship transactions like EQT´s acquisition of Idealista.

We continue to see a trend for large deals in the energy sector, with CSP assets taking center stage”

What trends do you expect to see in corporate M&A and private equity in the coming year? 

The pipeline remains healthy, much more so than we anticipated six months ago. We continue to see a trend of large deals in the energy sector, with CSP assets taking center stage. We also expect troubled businesses to start appearing in distressed M&A transactions, although not immediately. We are seeing minority investments becoming more of a trend, with the usual suspects, both domestic and international (for example, Aurica or Inflexion), closing important deals on this basis, while more traditional houses are creating ad hoc structures for these types of investments. In the energy sector, there are a number of big-ticket deals already happening (for example T-Solar) as a means of consolidating operational assets. And green hydrogen projects come as the next big thing.

What are the biggest challenges clients currently face when making acquisitions in Spain? 

Work wise, social distancing is no longer an issue and we have all changed our habits and adapted. Legally speaking, foreign direct investment restrictions enacted back in March are one of the hot topics in M&A, especially in every auction where an international fund is bidding. But the truth is that Spanish authorities are proving accessible and agile in their consultations with law firms, and this is worthy of praise.