You know that Turkey has twice listed companies that the Spanish stock exchange, with a GDP that is half Spanish. Spanish companies have relied traditionally on bank financing. The balance of loans to companies in Spain has more than tripled since year 2000, a disproportionate growth experienced by the GDP in that period. The credit crisis that erupted in July 2007 marked a before and after the ease of obtaining bank loans. If access to bank financing becomes more difficult, where growth will go to finance Spanish companies?
In this new blog of The Confidential we want to accommodate alternatives to pure bank financing with particular attention to the Alternative Stock Market (MAB), but which also give importance to other options such as private debt issues, degrees in original form or Islamic bonds, among others. In the blog will have the views of specialists in different areas involved in these processes (lawyers, financial advisors, companies specializing in corporate communications) and investors in those assets, so that readers can understand the opportunity and challenges that open with these funding routes.
The characteristic of this type of financing is that, in most cases, is related to more traditional practice of issuing shares and debt, where returns are more of a title commensurate with the value that good or service funding and less to the effect of indebtedness. Funding where the independence of advice, both issuers and investors is crucial and where some of the practices carried out in recent years have no place.
This funding is of particular relevance for Spanish companies which until 2007 enjoyed exceptional ease to access, directly and indirectly, to bank financing – you’ll treasure that God never to return – and with limited use of private debt issues or shares in stock markets. The credit crisis marks a turning point that will encourage alternative financing.
This funding also makes sense for investors, because they remain and continue to seek to place their wealth in assets that give them access to attractive returns and to diversify of its portfolio, in a context in which these investors require returns and assessments between assets, other than those we have experienced in recent years, distorted, in some cases, the effect of “leverage” (debt easy and abundant).
In this context, we believe that MAB was created by BME, opens an opportunity for mid-cap companies in Spain to get the bag, where one side will find advantages to the companies themselves, their shareholders and employees, and secondly, will have to manage the challenge of transparency which is listed on the market. The Ibex 35, Telefonica accounts for a quarter of this index: MAB, represents an opportunity for institutional investors and high net worth individuals involved in growing companies that generate a significant part of Spanish GDP and is underrepresented in stock.
Last week came to the U.S. market trading on the Rosetta Stone software maker. On a day rose by 42%. In the week preceding two trading companies left in the U.S., with significant increases also. This has led to improved sentiment in the markets, which has allowed to reopen the process of flotation. Thus, capital markets, alternative to bank financing, will be a necessary and effective alternative route for companies to be funded and there are sufficient reasons to believe that will have greater relevance in the years to come by enduring the difficulty of access to traditional forms funding.
In the circumstances we live in the coming years will be critical to find alternatives to the pure bank financing and how to reach these sources will write on the blog.
I say goodbye using an adapted quote from Keynes on this point: “If circumstances change, I change my mind and you what do you do?”
Constantino Gomez, a partner at Arcane