Financing with private Spanish capital – a term that includes venture capital and private equity – has had a very positive impact on the companies in which it has a stake, as between 2005 and 2015 it generated 27,000 new jobs (+29.9% aggregate growth), nearly 2.71 billion euros in sales (+22.4% aggregate increase), 258 million in EBITDA (+19.7% aggregate) and almost 2.24 billion in total assets (+11.6% aggregate).
These are the main conclusions of the report entitled "Economic and social impact of private capital in middle market operations in Spain", by the Spanish Association for Capital, Growth and Investment (ASCRI) prepared by José Martí Pellón, professor at the Complutense University in Madrid.
The study focuses on the 186 companies that received an investment of between 10 and 100 million euros from private capital to fund their growth and consolidation between 2005 and 2015. To measure the trends in employment and the main financial indicators of these companies, the study compared them with those of a similar group of companies belonging to the same activity sectors but which did not receive funding from private capital.
The companies backed by private capital created jobs at a much faster rate than the other companies, and in a sustained way: in the short term (up to 3 years after the investment) they grew an average of +7.6% year-on-year compared to 2.3% year-on-year for the control group. In the long term (up to 2015), growth was 29.9% in companies with private capital compared to the destruction of employment in the control group at a rate of -2.8%.
The study was presented at ICO, where Juan Luis Ramírez, chairman of the ASCRI, noted: “It is well worth encouraging private capital due to the multiplying effect it has on companies, particularly in a country like Spain in which the SMEs are so small that they find it hard to compete in the global markets. What's more, the confirmation of this value creation attracts new investors, essentially international, who decide to contribute new and better capital to Spain's private equity funds, thus perpetrating a virtual circle.”
Private capital: a major development
In its over 30 years of existence, this sector has seen significant growth and played an enhanced role in society in general and in the economy in particular. The number of operators registered in Spain has gone from 71 firms in the year 2000 to 258 at the close of 2017, and in this period they have invested over 44 billion euros in over 7,500 companies.
At the end of last year, the portfolio of companies part-owned by the sector was over 2,760, 92% of which are SMEs, which provide employment for 400,000 people. Considering that over 65% of Spain's GDP is currently composed of small and medium enterprises, the private capital sector has become an essential and key simulator of the economy and of companies.
The figures in the report confirmed the outstanding contribution of private capital to the short- and long-term creation of value in SMEs, even in periods of recession or minimum growth of the Spanish economy, as occurred in the study period.
Last updated: 13|04|2018