“The private equity industry in Spain and Portugal is thriving”

Leaders League: What trends are currently shaping the private equity landscape in Spain?

Teresa Pastor Alonso: The private equity industry in Spain seems finally ready for the resurgence of M&A activity. After a couple of quieter years from mid-2022 – where the market was hit by high cost of capital, inflation and geopolitical instability –  2024 has finally brought some cautious optimism based on decreasing interest rates, plenty of dry powder and aging sponsors’ portfolios.

In the first half of 2024 we saw some pick-up in activity, but the key contributor to higher deal values year-on-year have been large transactions by international funds (e.g. the acquisition of Idealista by Cinven, Wendel’s investment in Globeducate alongside Providence, or the de-listing of Applus by a private equity consortium). The small and mid-market have had a slower start, with most sponsors focusing on delivering the value creation plans of their portfolio companies given fewer sale processes and most of them taking longer than usual to close or even failing to complete.

In the second half of the year, I see signs of acceleration with an increasing number of sale processes either ongoing or preparing to launch soon. I expect the majority of the private equity activity to focus on highly resilient industries such as IT and digital transformation, sustainability & energy transition and healthcare. Also, given the fragmented nature of some industry segments, we should continue to see build-up strategies where private equity firms acquire smaller businesses in order to consolidate that industry and create a major market leader; a strategy that has been particularly effective in industries like healthcare and technology.

What sectors are seeing the most investment in Spain and Portugal?

We are seeing a few sectors really standing out in both Spain and Portugal. Technology is certainly at the forefront as companies across Iberia embrace digitalization. The pandemic accelerated the need for digital solutions, and that trend has only continued.

Healthcare is another big focus. Driven by an ageing population with greater incidence of disease, as well as an emphasis on preventive healthcare post pandemic, there is a growing demand for healthcare services, which has made this sector very attractive to investors.

“2024 has brought some optimism based on decreasing interest rates, plenty of dry powder and aging sponsors’ portfolios. “

Renewables are also attracting a lot of attention. Both Spain and Portugal have made significant strides in solar and wind energy, and private equity firms, including Bridgepoint, are capitalizing on this momentum by investing in infrastructure and services tied to the energy transition.

Lastly, consumer goods and services are experiencing a resurgence, particularly as the economy recovers and consumer confidence grows.

How does Bridgepoint approach exit strategies in the Iberian market, and what factors influence the timing of exits?

Our approach to exit strategies is highly tailored to the specific asset and related market conditions. We focus on balancing the need to return capital to our investors with maximizing the long-term value of our portfolio companies.

We typically aim to hold investments for 3-5 years, however several factors influence our timing. Firstly, the growth and maturity of the businesses we invest in is crucial. During our investment tenure, we focus on growing and professionalizing the company. Once we have helped the business execute the value creation plan and deliver the vision, we look for the best exit opportunity.

Nevertheless, we always keep a close eye on market conditions, including buyer appetite and sector-specific trends. If the sector a company operates in is experiencing strong tailwinds, that can drive better valuations and increase buyer interest, which often prompts us to move forward. We pursue exits either through other private equity buyers or through strategic acquirers, whichever makes most sense at the time.

“Bridgepoint’s approach to exit strategies focus on balancing the need to return capital to investors with maximizing the long-term value of portfolio companies”.

Our exit of Dorna Sports is a good example, where we sold to Liberty Media for more than €4 billion, having worked with the management team for many years in realizing an ambitious value creation plan. (The completion of the sale is subject to regulatory approvals expected in H2 2024).

You are a member of Level 20, an organization promoting women in private equity. What advice would you give to young women considering a career in private equity?

My advice would be to embrace the current momentum in the private equity space and recognize the opportunities for women in investment roles, especially as diversity is increasingly being recognized as a competitive advantage in dealmaking. The private equity industry, particularly in countries like Spain and Portugal, is thriving, and it’s an excellent time to be part of it.

“Young women considering a career in private equity embrace its current momentum. Putting together diverse voices can be a huge advantage when it comes to decision-making and innovation.”

In this regard, I would encourage women to bring their unique perspectives to the table. Private equity can sometimes feel like a male-dominated industry, but putting together diverse voices can be a huge advantage when it comes to decision-making and innovation. Don’t be afraid to leverage that and take leadership opportunities early in your career.

I find mentorship to be a great way to expand your reach and support your career development. Mentors can provide not only career guidance but also help expand your networks. This industry is very relationship-driven, so building those connections early is key.

Lastly, always stay curious and committed to learning. Private equity is a fast-moving industry. With sectors like technology, healthcare, and renewable energy seeing increased investment, there’s a lot to keep up with, and having that industry knowledge will give you an edge and position you as a valuable asset.