Spain’s $24 bln investment giant has too many hats
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Yawen Chen
LONDON, June 12 (Reuters Breakingviews) -One of the biggest players in Spanish M&A right now is also one of the most unusual. Criteria Caixa, the 22 billion euro ($24 billion) investment arm of the La Caixa charitable foundation, has been snapping up stakes in listed companies while also making its presence felt at local blue chips Telefónica TEF.MC and Naturgy Energy Group NTGY.MC. The group will present a new strategic plan in Barcelona on June 17, a person familiar with the matter told Breakingviews.
Criteria’s Chair Isidro Fainé seems fixated on protecting national champions from foreign incursions, which could chill Spanish M&A. One fresh example occurred on Monday, when Abu Dhabi’s TAQA dropped its takeover bid for Spanish utility Naturgy, sending the shares down more than a tenth. The informal political mission is also at odds with the group’s official one of preserving and growing the wealth of its parent charity.
The organisation’s roots date back to the founding of a Barcelona-based savings institution in 1904 by Catalan lawyer Francesc Moragas. A charitable arm, retail bank and investment holding company for many years all sat under one roof, until a series of reorganisations starting in the 2000s. The group’s managers, including Fainé, eventually carved it into three parts: the La Caixa philanthropic foundation, which fully owns the investment wing Criteria Caixa, which in turn owns a portfolio of stocks including a one-third stake in 39 billion euro Spanish lender CaixaBank CABK.MC. Fainé chairs the foundation and the investor, but stepped down as head of CaixaBank’s board in 2016.
After a few years of focusing on debt reduction, Criteria now seems to be in expansion mode. Fainé’s new CEO Ángel Simón at Criteria started his job in February and quickly embarked on a buying spree, pocketing 2.5 billion euros’ worth of stakes in listed companies during April and May, according to Breakingviews calculations. That includes chipping in on Spanish fashion house Puig’s PUIGb.MC initial public offering, buying a 9% holding in Spanish construction company Grupo ACS ACS.MC, almost doubling its stake in Spanish telecom giant Telefónica to 5%, and raising its stake in property group Inmobiliaria Colonial COL.MC to 17%.
That’s not all. Criteria is also mulling increasing its Telefónica holding to 10%, a source familiar with the matter told Breakingviews, and was planning on boosting its ownership in Naturgy from 27% to around 35% as part of a joint takeover with TAQA. It’s unclear whether that idea will go ahead now that the joint takeover is off. But those two deals would cost 2.9 billion euros in total, taking the possible overall spending this year to 5.4 billion euros, based on Breakingviews estimates.
The spree makes life tricky for Spanish M&A bankers, who are trying to figure out which foreign takeovers are likely to fly in Madrid. Criteria claims to be non-political, but from the outside Fainé seems to be in sync with the government. The group has been upping its stake in Telefónica alongside state fund SEPI, helping Fainé’s group earn the nickname “private SEPI” among Spanish financiers. The pair acted shortly after a move by Saudi Telecom Company 7010.SE, which last September said it had bought 4.9% of the Spanish telco’s shares and financial instruments giving it another 5% economic exposure.
At both Telefónica and Naturgy, where big private equity shareholders are looking to exit, Criteria wants to help stabilise the companies’ ownership while boosting its managerial presence, a person familiar with the strategy told Breakingviews. The problem is that it looks increasingly difficult to judge what exactly Fainé is after. In April, for example, newspaper Expansión reported that Criteria would consider putting a bid together to counteract a politically controversial Hungarian offer for train maker Talgo TLGO.MC. Fainé may see it as a matter of reputation and influence. The risk is that he ends up moonlighting for the Spanish government, but without the legal certainty or accountability of formal state M&A intervention.
The other problem with Criteria’s deal spree is financial. It’s not clear how Fainé and Simón are funding the splurge, but there are few good options. Having managed to more than halve its net borrowings to 15% of total asset value in 2023 from 32% in 2016, the group risks undoing much of that progress if it uses debt. Its credit is rated as BBB+ by Fitch and Baa2 by Moody’s – three and two notches respectively above junk.
Selling down stakes would be another possibility. For example, Criteria on Tuesday said it had offloaded about 600 million euros of shares in mobile tower group Cellnex CLNX.MC. But that holding is small relative to its 12.1 billion euro CaixaBank stake and 5.5 billion euro Naturgy one. Selling either of those would raise issues. The utility is a tough selldown target because of the takeover drama and the lender hard to offload too because of its role as a healthy dividend payer. Criteria should get about 1 billion euros from CaixaBank’s 2024 dividend alone, according to Breakingviews calculations using Visible Alpha data. That incoming cash will admittedly help reduce leverage at the margin, but a big chunk of it gets earmarked for the so-called “social dividend” to the La Caixa parent foundation. The payment was 400 million euros last year and is set to rise this year as the foundation budgeted a record 600 million euros for social spending.
Finally, it’s unclear how Fainé and Criteria’s M&A activism are supposed to fit with its core mission: to “preserve and grow” the La Caixa foundation’s wealth. Taken at face value, that would imply avoiding Spanish stocks, since the IBEX 35 Index has delivered a 50% total return including reinvested dividends over the past decade compared with 140% for the MSCI All Country World Index and 230% for the S&P 500 Index. The investment arms of other non-profits, like Britain’s Wellcome Trust or U.S. university endowment funds, have become sophisticated international players, investing outside their home markets and in alternative assets like private capital. The logic in these cases is that optimising for anything but financial returns means short-changing the foundation.
Fainé and Criteria clearly don’t see it that way. But if their protectionist M&A binge ends up delivering subpar returns, it won’t just be M&A bankers that have cause for complaint.
Follow @ywchen1 on X
CONTEXT NEWS
Criteria Caixa, the investment arm of the Spanish La Caixa foundation, will present a new strategic plan on June 17, according to a person familiar with the matter.
Criteria Caixa said on June 10 that it had not reached an agreement with Abu Dhabi’s TAQA over a potential joint takeover bid for Spanish gas firm Naturgy Energy Group.
TAQA said in April that it was in talks with Naturgy’s three largest shareholders – Criteria and private equity funds CVC Capital Partners and Global Infrastructure Partners, which own 27%, 21% and 21% respectively, according to LSEG data.
Criteria said it will continue to explore alternatives to accelerate Naturgy’s growth, provide stability to the company’s shareholder register and allow Criteria to maintain its position as a partner to the company.
Graphic: Criteria Caixa portfolio https://tmsnrt.rs/3Rqrbom
Graphic: Criteria Caixa has been on a domestic shopping spree in 2024 https://reut.rs/3VbG6na
Graphic: Criteria Caixa’s declining net leverage ratio since 2016 https://reut.rs/4ehkwq6
Editing by Liam Proud and Oliver Taslic
متعلقہ اثاثے
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
