“Spain is alive, really alive. It is within sovereign funds scope,” said ESADEgeo vice president Javier Santiso, who last year conducted a report on these state-owned investment devices in Spain. Rumours about Repsol’s intention to sell part of its 30% stake in also national Gas Natural to a couple of sovereign funds supports that argument.
The affair has been repeatedly commented since Repsol announced one year ago its LNG’s (Liquified Natural Gas) assets sale to Shell at an amount of $6.6 bn. After the transaction, which has been terminated in 2014, Gas Natural does not make sense within Repsol in terms of strategy, thus accelerating its possible coming out of the company. Repsol could have agreed the sale of its 30% participation through three blocks of shares holding 10%. Two of these packages could go to sovereign funds and the third one be placed through a book building process.
Sovereign funds Qatar Investment Authority, Sinopec and Temasek, belonging to Qatar, China and Singapore respectively, have been previously considered to buy Gas Natural’s packages, but at this moment nothing has been confirmed.
Despite a significant global decrease in sovereign investment, these funds brought $4,6 bn to Spain in 2012 and first sixth months of 2013 against $8,4 in previous year. One of the most relevant operations in the national market during 2013 was the one of Singapore’s Temasek fund, which paid €1,4 billion for a 5% stake in oil company Repsol.
“This would make reasonable that fund to purchase one of those 10% packages of Gas Natural. They know the context and the country,” Javier Flores analyst at Asinver explains. “Qatar fund also entered Spanish energy sector via Iberdrola, thus having options in this Repsol’s disinvestment,” the expert adds.
The point with sovereign wealth funds in Spain is that companies are allowing foreign investors to enter their capital, which in past times was a practice not forbidden, but restricted by law.
“When English people talks about their Wimbledom tennis tournament, they always say the important thing is the game played in UK more than a British player reaching the championship’s final. Something similar is the change Spanish companies have made regarding sovereign funds,” Flores concludes.
Repsol’s operation over Gas Natural should also be approved by La Caixa, which holds a main 36.4% stake of Repsol. It could even disinvest a 5% participation and has right of veto over the potential buyer.