The Corporate Finance business at BBVA started 2017 in as good as shape as it ended last year. In 2016, BBVA closed 18 deals in Spain, 10 in Mexico and six in Latin America. The start of 2017 was very busy, and the Bank "hopes to once again be the bank with the most closed deals in its core markets, especially in Spain and Mexico."
These are the words of José García Casteleiro. He has been the global head of Corporate Finance (Corporate & Investment Banking) within the BBVA Group since late 2015, after more than 20 years working in investment banking at BBVA. Positioned within the investment banking division, his unit specializes in advisory for M&A (Mergers & Acquisitions) and initial public offerings.
Jose García Casteleiro, Head of Corporate Finance at BBVA. - Universidad Pontificia Comillas. Photographer: José ángel Molina.
In an interview to the economy newspaper Expansión, García Casteleiro pointed out that the energy sector is seeing significant corporate activity. One of the Bank's main focuses are medium-sized enterprises (EBITDA between 10 and 80 million euros). In this "middle market", which sees a lot of business, BBVA holds a leading position on the strength of its commercial network.
García Casteleiro: "In 2017, there will be two major areas of focus: energy and the middle market, which are going to be very active
García Casteleiro mentioned that given the current climate, with a good macro-economic situation and interest rates that are starting to go up, Spain is still a destination of choice for investors. "Southern Europe, particularly Spain, has shown that it has a very attractive risk-return ratio and investors have a lot of liquidity, which will mean that many investors will look to Spain," he affirmed.
Asian investors have made major investments in Spain in 2016 and BBVA has channeled a lot of these flows, including deals as important as the sale of Urbaser or Galp Portugal. "These investors want to keep investing; they like the setting, the technology and they think they have a lot to give to the country."
Good outlook for M&A in 2017
2017 began with better circumstances and "investors are pretty much separate from political risk; they are starting to see it as something they must expect and get used to, albeit political uncertainty is less than at the start of the year."
García Casteleiro predicts a lot of activity in small- and medium-sized enterprises because there is still a lot of interest and money in private equity. "It may take a bit longer for M&A to reach large companies," he stated. "I don't think it has to do with the political climate. These companies can afford to wait a bit longer for confirmation of the growth and can benefit from better assessments because their businesses are growing."
The power of digitalization
BBVA is now the world leader in the technological transformation of banks. Digitalization is also embedded into the Bank's DNA, as explained by Francisco González during the Anual General Meeting in March.
Digitalization also has a direct impact on Corporate Finance. "This is allowing more technological customers to come to BBVA because they know that the Bank has a lot of resources dedicated to technology and that we have close links with investors, both inside and outside BBVA," explained García Casteleiro. "One of the teams in the Bank invests in a lot of digital projects and we know which investors we can offer our customers."