Tag: general elections

GS & Cerberus Exit ‘Project Elcano’ Due To Political Uncertainty

24 June 2015 – El Confidencial

Banco Popular, led by Ángel Ron (pictured above), is seeking to divest real estate assets worth €500 million (Project Elcano), but the political uncertainty in Spain is making investors nervous.

According to sources close to proceedings, the main candidates in the running to take over Popular’s portfolio – namely, the private equity fund Cerberus and Goldman Sachs – have decided to postpone investment until after the general election in November, by which time the current uncertain outlook in the country should have cleared.

The same sources add that these two candidates have indicated to Popular that, given the situation in the country following the results of the municipal and regional elections and the subsequent (political) agreements being made, they are not willing to pay the price demanded by the bank; i.e. if the entity really wants to sell, then it will have to lower its (price) expectations.

Ron’s response has been negative because he is not willing to assume additional losses over and above the provisions already recognised against this portfolio. Moreover, other parties are interested in the operation, which means that it could still go ahead before the elections. A spokesman for Popular declined to comment on this information.

This withdrawal is not an isolated case. The uncertainty generated following 24-M (the municipal and regional elections held on 24 May) has had a dual effect amongst the large international investors: firstly, it has made them cautious and slam down on the breaks, whereby delaying numerous deals. Secondly, it has made them reduce their bids, which has punctured the emerging bubble that was forming in the Spanish market, particularly with respect to high quality assets. (…).

Nervousness in the market

Thus, Popular is the latest victim of this new environment in the Spanish market. However, investors and asset managers consider that the case of this bank in particular in more concerning. They are worried about Popular’s sizeable exposure to real estate (it holds around €11,000 million of RE on its books, net of provisions), because they consider that it is not sufficiently provisioned and its latent losses may require new capital contributions. As a result, the announcement that it was going to divest an initial package of €500 million assets generated relief in the market.

For this reason, these latest problems around closing the sale have made some players in the market very nervous. Yesterday, that resulted in decreases of 1.16% on the stock exchange on a day of increases for the Ibex. Popular’s share price has increased by around 15% this year, i.e. by more than the rest of the sector, with the exception of BBVA and Sabadell, however its valuation still falls below those of the major players in the sector at 0.76 times its book value. (…).

Original story: El Confidencial (by Eduardo Segovia)

Translation: Carmel Drake

Socimis: Spain’s Political Uncertainty Is Starting To Affect Investors

29 May 2015 – El Economista

The sector is hoping that the fear will pass and the uncertainty will come to an end soon.

Just two weeks ago, the real estate sector claimed that the emergence of new political parties in Spain would not affect the volume of investment. However, that perception has changed following the recent elections.

The current political uncertainty is palpable and the players in the sector fear that investment in property is stalling. The main Spanish Socimis are already detecting reluctance from investors, based on the views they shared at a forum organised by Deloitte. Moreover, the CEO of Merlín, Ismael Clemente, warned yesterday that companies issuing bonds will do so in poorer conditions from now on.

The fears

According to sources consulted by this newspaper, the sector fears that funds “will suspend the plans they had for Spain until after the general election”, or that they will have a complete change of heart and choose to focus on other markets.

Nevertheless, there is another side to the coin and that is that the funds may play their cards so as to push down prices  in the face of so much “uncertainty”. That is the word that has been repeated time and again in the sector over the last few days, but everyone is hoping that the “fear will soon pass”.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake