* Toxic and tangible assets eyed in economic recovery
* Common language, history facilitate deals
* Spain needs foreign investment to secure jobs growth
By Tracy Rucinski and Elinor Comlay
MADRID/MEXICO CITY, Jan 8 As Spain's economy
begins to recover from a near-fatal crisis, Latin American
companies and entrepreneurs are ahead of the pack in gaining a
foothold from which they can grab a share of the spoils.
Mexicans, Venezuelans and others have moved into areas such
as banking, travel, food and other consumer-orientated sectors.
Investors from Spain's former colonies are also snapping up
financially strained firms in "the Mother County" in need of
In recent surprise deals, Venezuelan bank Banesco won a bid
for state-rescued lender NCG Banco with an offer of
1 billion euros. Peru-based Grupo Santo Domingo pledged 100
million euros as part of a wider capital injection in Spanish
property firm Colonial.
"It's a logical phenomenon," said Enrique Quemada, head of
Madrid-based M&A adviser ONEtoONE Capital Partners.
"It's now clear that Spain isn't leaving the euro and the
euro isn't falling apart, so with opportunities at a good price
and a common language, it's the natural gateway for large Latin
American groups to enter Europe," said Quemada, who has opened
offices in Mexico, Colombia and Peru to tap investor interest.
The trend is a reversal of the investment tide in the 1990s
which saw Spanish businesses pour money into Latin America.
Newly privatised Spanish firms scooped up Latin American
banks, telephone companies and utilities, drawing
sometimes-unfavourable comparisons to their armour-clad
Conquistador ancestors 500 years earlier.
But a property crash in Spain in 2008 contributed to a long
economic and debt crisis during which buyers shunned Spain,
fearing it would follow neighbours Portugal and Greece into an
international bailout and contribute to the death of the euro.
With such fears now a distant memory, foreign money is
flowing back in, particularly from the pockets of wealthy Latin
Americans keen to take advantage of the recovery and use Spain
as a stepping stone for further investment in Europe.
The recession created a wave of corporate bankruptcies and
left one in four workers unemployed, and investment from abroad
is key to securing a recovery and jobs growth in 2014.
Even though Spain's blue chip index is trading at 2
and 1/2 year highs, bankers said Spanish companies still offer
attractive multiples versus their European peers.
"It's just got to attract foreign investors. And this is the
moment, the moment of inflection as prices for assets are low
and the economy is giving signs of picking up," BBVA economist
Rafael Domenech said.
Colonial, for example, is trading at a 14 percent discount
to net asset value versus an about 4 percent discount for
European peers, implying potential deals in the real estate
Big investments from prominent billionaires George Soros and
Microsoft founder Bill Gates in debt-laden builder FCC
have helped boost confidence in Spanish assets, which have also
seen interest from Chinese and sovereign wealth investors.
But the bulk of M&A deals have come from Latin America.
MEXICO LEADS DEALS
The "Reconquista" has coincided with a rise in wealth in
Latin America and particularly in Mexico, which has led to the
string of Spanish acquisitions ranging from bank and food assets
to buses and shipbuilding.
Over the past six months, Mexican investors have taken
stakes in banks Popular and Sabadell, meats
processor Campofrio, shipbuilder Barreras and
transportation company Avanza.
Spanish media say Mexican businessman Miguel Valladares is
likely to come to the rescue of entertainment firm Zinkia,
producer of the internationally-known cartoon Pocoyo, which
recently filed for insolvency.
They also predict a deeper partnership between billionaire
Carlos Slim and lender La Caixa, which along with other Spanish
savings banks is considering the sale of vast corporate stake
holdings to meet stricter European capital rules.
Slim still heads the list of Mexican billionaires, 13 of
whom figured in the top 1,000 of Forbes Magazine's annual rich
list at the start of 2013, with a total net worth of almost $146
By comparison, there were 11 Spaniards with assets valued at
nearly $90 billion.
Mexican Economy Minister Ildefonso Guajardo said the
financial crisis had created opportunities for investors in
Europe at a time when Mexican companies were already looking to
expand their reach into the rest of the world.
"Before, we only looked at attracting investment. Today
Mexico is making record foreign investments," he told Reuters.
Lured by a more stable legal and investment framework in
Europe versus Latin America, large fortunes and family offices
are using Spain as an entry point to the Old Continent.
The strong presence of Spanish banks such as BBVA
and Santander in Latin America has also helped
"The trend is a reverse from what was seen 10-15 years ago
when Spanish firms invested heavily in Mexico acquiring local
banks and participating in bids to build major infrastructure
projects," said Jim Seale, president of Seale & Associates,
which is currently advising a Mexican firm looking to buy in