The Latin American investment boom in Spain has numbers and goes far beyond the purchase of luxury homes in the center of Madrid or Barcelona. The latest Icex calculations show that the stock investor in this region in Spain has just exceeded 86,000 million euros, after registering a strong acceleration and adding 20,000 million in just two years.
The increase is 40% and makes Latin America, if it could be counted as a single country, the fourth largest investor in Spain, behind the United States, the United Kingdom and France. Money has changed direction and is now flowing more from Latin America to Spain than the other way around, encouraged especially by Mexico, which is on its way to becoming the first Spanish-speaking economy in terms of GDP.
“Is Spain the new Miami?” asked a few days ago the director of financing of the Icex, Alberto Sanz Serrano, at the Latibex forum, held in Madrid, in which there was no shortage of comments and reflections on the new investment trend . The body estimates that last year around 400 new business projects from Latin America were registered in Spain, which has become the gateway to the region’s money: the number of initiatives being announced is four times higher than that of Germany, 13 times more than that of France and almost 40 times more than that of Italy.
The Mexican Frank Aguado, senior advisor of the investment firm Brücke, commented at this meeting on the factors that, in his opinion, attract Latin American investors. Apart from the cultural connection, there is an interest in acquiring technology, expanding the market, enjoying tax advantages and taking advantage of an environment of personal security that does not exist in countries with high crime rates.
On a corporate scale, the biggest Latin American investor in Spain last year was Ecuadorian bank Pichincha, ahead of Mexican cement company Cemex and Brazilian footwear brand Havaianas. The Brazilian shareholders of Sidenor and the Mexicans of Grup Bimbo and Cristal Glass are also among those who have made the most efforts.
Cuatrecasas partner Antonio Barba believes that, contrary to popular belief, Spain has a very attractive tax framework for Latin American investments. It has the figure of the ETVE, the foreign securities holding entities, which encourages the creation of holdings in Spain by offering a 95% exemption for dividends and capital gains received from abroad. “Spain is an ideal region with nothing to envy to Miami or London”, he says. “We are also the country in the world with the most double taxation agreements with Latin America”.
The main source of investment by far is Mexico, with 46.8% of all resources arriving in Spain last year. It exceeds 13.7% in Argentina and 8% in Colombia or Venezuela. However, Brazil, which accounts for 9.3% of the total, is gaining strength according to experts due to fiscal obstacles and growing restrictions on the housing market in Portugal, its country of reference.
Attracted by the opportunities, the Brazilian investment bank BTG Pactual, a leader in its region, has just opened offices in Europe, one in Madrid and another in Luxembourg, according to its executive director in Spain, Pablo López Lázaro. “The reasons for investing in Spain have changed. The personal bond has evolved into entrepreneurship, in search of geographical diversification and interest in expanding to the rest of Europe”, he says.
In businesses such as real estate, investment has gone from being personal to being extended to investment companies, the socimis. Adding to the trend is that “the economic elites are choosing Spanish universities to train the next generations”, he points out.
Experts point to another factor. Miami was until now a relatively affordable destination for the Latin American investor, because it barely competed with the North American one. In fact, he did it with “retired people”, says López Lázaro. However, there are now large capitals in the country interested in Florida and this diverts attention towards Spain, where, despite price increases, a “more reasonable financial alternative” is perceived.
