China accelerates investment in Spain in 2020

China accelerates investment in Spain in 2020

China has started 2020 with a boost to investment in Spain, after in 2019 the figure contracted by 95%, going from 1,170 million dollars (1,061 million euros to the current change) to 80 million dollars (72, 5 million euros), according to a report by Baker McKenzie. The state-owned China Energy Engineering Group, known as Energy China, recently signed the acquisition of several Iberdrola, Naturgy and Técnicas Reunidas engineering companies focused on the energy field and, especially, the nuclear one. Also, in the coming weeks, two other relief operations agreed to last December will be closed: the purchase, by two construction companies of the Asian giant, from Aldesa, on the one hand, and Bridges and Roadways, on the other.

The final amount of these operations has not transcended, but they significantly multiply the Chinese investment in Spain recorded in the last year. It also represents the determined landing of China in Spanish infrastructure companies after multiple attempts in recent years. A bet with which they intend to facilitate their expansion in Latin America by taking advantage of their references. HNA and China State Construction Engineering Corporation (CSCEC) analyzed in their day entering OHL. The second did the same with Duro Felguera and other firms such as Abengoa remain on the radar. The only significant precedent that was set is that of Eptisa, the engineering that JSTI acquired three years ago, although the disbursement it required was limited to 16 million euros.

Energy China, the 12th largest construction company in the world in 2018 by revenue according to the ENR list, signed last week, through China Energy Engineering Group Planning & Engineering (CEP), the purchase of 100% of International Grouped Entrepreneurs, Ghesa Engineering and Technology and EA nuclear exploitation services GNIT, as advanced by the Economist. The operation started two years ago when Iberdrola put its stake up for sale. A movement that followed after Naturgy and Técnicas Reunidas. The new owner intends to generate synergies between the companies.

Meanwhile, China Railway Construction Corporation (CRCC) has agreed to take 75% of Aldesa, the ninth largest Spanish construction company by turnover. It will execute its entry through a capital increase of 250 million euros plus an additional amount - not disclosed - for the current owners, the Fernández Rubio family, which will retain 25%. With this, the Chinese giant, which has a majority of the capital held by the State but is publicly traded and has large investment funds among its shareholders, wants to grow in Latin America and Europe. Its landing will provide Aldesa with the financial capacity to make the leap to major international projects.

The Otero family, on the other hand, has reached an agreement to enter the China Road & Bridge Corporation (CRBC) in the Galician infrastructure company Puentes y Calzadas. The subsidiary of China Communications Construction Company (CCCC), the fourth largest construction company in the world, will take a majority stake.

With the acquisition of Spanish construction and engineering companies, China wants to boost its expansion in Latin America, a region in which they already have a very prominent presence - their construction companies are the second most invoiced only behind, precisely, the Spanish ones. Latin American countries have multiple infrastructure investment programs underway and Chinese construction companies rely on dominating the market with Spanish partners who have references and very favorable historical relationships. It also allows them to open the doors of Europe, where until now their performances have been limited.

Beyond infrastructure, the interest of Chinese groups is growing in multiple businesses in Spain. One of the most active in recent months is that of renewable energy, both as builders and developers (Energy China) as shareholders. This is the case of Fotowatio, object of desire of Three Gorges. Other firms of the Asian giant that are betting on the development of photovoltaic installations are Premier Group and the manufacturer of solar panels Risen Energy, which have already made their first forays into the Spanish market. A little over three years ago, China Tianying undertook the largest operation of a Chinese group in Spain with the purchase of ACS, for some 2,000 million euros - including debt - from Urbaser, a company specialized in environmental services.

Digital Newspaper El Economista



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