Bankinter | According to press sources, Qatar’s state investment fund (Qatar Investment Authority) wants to increase its stake in Iberdrola. Qatar’s representatives have reportedly been sounding out the Spanish government to gauge its predisposition to such a corporate move. Qatar entered Iberdrola in March 2011 with just over 6% in a €2 billion transaction and through a capital increase. It later increased its stake to the current 8.7%. The value of this stake is €7.4 billion.
Opinion of the analysis team: Good news for Iberdrola, which shows Qatar’s long-term commitment, the good understanding with the management team and the very positive evolution of its investment. Qatar is Iberdrola’s largest shareholder with 8.7%, ahead of BlackRock (5.3%) and Norges (3.5%). None of these shareholders is on its board. Qatar has several reasons for continuing to increase its stake in Iberdrola. On the one hand, like all Middle Eastern countries, it wants to reduce its dependence on hydrocarbons and is looking for long-term investment alternatives. It also wants to gain weight in the face of the expansion in the European energy sector of Abu Dhabi, its neighbour and great economic rival in the Gulf. Masdar, the Abu Dhabi Emirate’s renewables group, has sealed an alliance with Endesa to promote renewables in Spain, an agreement with Iberdrola to develop projects outside Spain, tried to take over Naturgy and is currently bidding for the purchase of Saeta Yield. On the other hand, the investment in Iberdrola has provided a very attractive return in this period (+125% revaluation in the share price plus dividends). As for the government’s response to this potential Qatari proposal, current regulations require that any foreign investor holding 10% or more of a listed company in Spain must have its authorisation. The fact that Iberdrola is considered a strategic asset could lead the government to set a limit for this Qatari stake. In any case, we believe that the stock market impact of this news will be positive for Iberdrola. There will be buying pressure on the share and it is a clear endorsement for the group’s management and Strategic Plan. Iberdrola is in the 5 Spanish stocks model portfolio and also in the European stocks model portfolios.
