According to calculations by the newspaper Expansión, based on official statistics and information from various institutions, sovereign wealth funds have invested a total of around €75 billion in the Spanish economy. State entities from Norway, Japan, Singapore, Saudi Arabia, Qatar and the UAE (Abu Dhabi) are gaining ground in the Ibex, Treasury bonds and key sectors such as energy, telecommunications and real estate.
Norway
A significant share comes from Norges Bank Investment Management (NBIM), the body set up by the Norwegian government to invest the country’s oil and gas revenues. Its investments in the Spanish economy amount to €20 billion, of which around €11.2 billion is in the stock market (for example, sizeable stakes in Unicaja, Repsol and Solaria), another €7.8 billion in bonds (more than half of it Treasury debt), and the rest in renewable energy assets (through an alliance with Iberdrola) and real estate (through a joint venture with Prologis).
Japan
Less well known is the activity of Japan’s giant Government Pension Investment Fund (GPIF), which is in fact the world’s largest sovereign fund by the value of its assets. It also holds around €20 billion in Spain, but allocates it very differently: around 85% is placed in government debt and only 15% in the stock market.
Middle East
These two are followed by state investors from the Middle East. Qatar, both through its sovereign wealth fund and through other companies or entities, has invested a total of $11.2 billion in Spain thanks to its stakes in Iberdrola, Colonial, El Corte Inglés and IAG (in this case through Qatar Airways). The country’s authorities now want to raise their current stake in Iberdrola from 8.5% to 10%.
The Emirate of Abu Dhabi (UAE) favours direct investment, as shown by its control of the Spanish oil company Cepsa through Mubadala. Its 63% stake (the rest belongs to Carlyle) could be valued at around €8 billion.
Another company from the same emirate, Masdar, has just invested 1.5 billion in two renewable energy deals in Spain: buying 49% of a portfolio of Endesa assets and acquiring Saeta Yield from the Canadian fund Brookfield. Abu Dhabi’s weight in Spain would be even greater if its energy company Taqa had gone ahead with the takeover of the gas company Naturgy, which it abandoned after several months of negotiations.
The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, entered Spain last year through Saudi Telecom Company (STC). STC unexpectedly bought 9.9% of Telefónica in a €2 billion deal that is still awaiting approval from the Spanish government.
The Kuwait Investment Authority (KIA), the first sovereign fund to come to Spain, 40 years ago, is now looking for opportunities for its infrastructure investment arm Wren House. The company was a shareholder in the electricity company Viesgo and is now bidding for Nabiax, the owner of data centres used by Telefónica.
Singapore
Another sovereign fund that is very active in Spain, especially in real estate, is Singapore’s GIC. Last year it agreed to buy 35% of Hotel Investment Partners (HIP), the hotel chain owned by Blackstone. The company was valued at around €4 billion. In addition, in 2022 GIC teamed up with the Spanish fund Azora to start investing €1.5 billion in build-to-rent housing in Spain. On the stock market, this Asian fund owns 7% of Cellnex.
Canada
Canadian public pension plans are not strictly sovereign funds, as they usually operate independently of governments (federal or provincial), but the Spanish Ministry of Economy still includes them in its list of foreign state investors. Ontario’s Omers holds a stake in the Spanish oil pipeline network Exolum, the Canada Pension Plan bought 25% of FCC Medio Ambiente last year, PSP owns the Roadis motorway group and OPTrust owns Globalvía.
According to the Ministry of Economy, direct investment by foreign sovereign funds in Spain at the end of 2022 (excluding listed shares and bonds) came to €22.025 billion. Of this amount, 38% is held by Middle Eastern investors, 22% by other Asian funds, 21% by European funds and 17% by North American funds. By sector, the preferred industries for these institutions in Spain are manufacturing, energy and real estate.
According to the latest report on these investors’ activity by Icex, Spain saw a record level of sovereign fund activity during 2022 and the first half of 2023, amid economic, geopolitical and social uncertainty. In 2022 these funds made 11 deals in Spain worth a total of €2.9 billion, beating the previous record set in 2014. The first quarter of 2023 was also particularly active, highlighted by the partnership between NBIM and Iberdrola in renewable energy and Mubadala’s investment in biofuels.
In the most recent period, real estate and technology have attracted the largest investments. GIC plans to put €1.5 billion into rental housing in Spain, and Mubadala keeps investing in care homes.
STC’s arrival as a Telefónica shareholder and the veto on Ganz-Mavag’s takeover bid for Talgo highlighted how sensitive the Spanish authorities are to the arrival of foreign investors controlled, directly or indirectly, by other governments. Although in the case of Telefónica and Talgo any international investor needs permission to exceed certain thresholds, the rules for sovereign institutions are stricter than for private investors.
The 2023 decree-law regulating foreign investment control suspends the freedom of companies linked to foreign governments to make acquisitions in Spain, in any sector, whether or not it is considered strategic. However, the legislation includes a clause that appears to exempt independently run funds, such as the Canadian ones, from the restrictions. This applies if the nature of the fund manager and the legal or regulatory provisions on its governance model make it clear that its investment policy is independent and aimed solely at returns, without any political influence from a third state.
