Eduardo González
Spain has become the second world destination for multi-Latin companies, only behind the US, and the “natural bridge” for the entry of Latin American capital into the European market, according to a report from the Business Council Alliance for Ibero-America (CEAPI), presented yesterday in Madrid.
“The multilatinas expand their radius of action and choose Spain as a bridge and center of operations, especially towards European markets, taking advantage of the historical ties and a common language that facilitate rapid investment deployment,” declared the president of CEAPI, Núria Vilanova, during the presentation of the report Multi-Latin Companies. The new Ibero-American multinationals, which took place at the Casa de México Foundation in Spain.
According to the study, prepared by Ramón Casilda Béjar, from the University Institute for Research in Latin American Studies (IELAT) of the University of Alcalá and professor of the master’s degree in International Relations at the Institute of Stock Market Studies (IEB), multilatinas are “a phenomenon “genuinely Latin American business” that generally lead the productive sectors in their countries of origin and in the other countries of the region where they are established, above national companies and, sometimes, multinationals.
These companies usually locate 88% of their subsidiaries between South America and Mexico and another seven percent in the United States and Canada, but in recent years there has been a growing tendency “to progressively expand towards other regions such as Europe and more specifically towards Spain”, as Casilda explained during the presentation.
Currently, these companies are already located, directly or indirectly, in 114 developed and emerging countries and in 2022 they reached historic levels of foreign direct investment (FDI), with a total of 74,677 million dollars, which represents an increase of 80 % compared to the previous year of investment from Latin America and the Caribbean to the same region or other destinations, such as Spain. This growth has been due, mainly, to companies of Brazilian and Mexican origin.
Disembarkation in Spain
In this context, Spain has become the “operations center for multilatinas” for several reasons, according to the study: “its ideal position at the intersection of three continents (Europe, Africa, Latin America), a solid private sector, “a first-class digital infrastructure, high-quality transportation and connections, highly qualified workforce, clean and affordable energy, institutional stability and legal certainty.”
Between 2011 and 2020, Spain had a Latin American stock of 48,631 million euros, somewhat lower than the 51,300 million euros in 2019, although in 2021 it registered a slight decrease to 47,168 million euros. However, the study indicates, the trend has been increasing, since, during the period 2011-2020, it increased by 92%.
By countries, the main origin of these investments in Spain is Mexico, with 28,004 million euros (57% of the total), followed by Argentina, with 8,076 million euros (16%), and Venezuela, with 5,040 million euros (10%). In the case of this country, these are, above all, real estate and banking investments (this is the case of the Galician bank Abanca, whose owner is the Venezuelan Juan Carlos Escotet). “Only France, the United States and the United Kingdom have invested more in Spain than Latin American companies, which exceed other emerging economies such as China in invested volume,” the report indicates.
According to Ramón Casilda, multilatinas feel “very comfortable in Spain,” where the headquarters of relevant Ibero-American associations, institutions and organizations are located, which make up a “dense capillary network” that helps turn our country into an “operations center” and to generate “positive and competitive differentiating positions that also facilitate access to the markets of Europe, North Africa and the Middle East.”
Another factor that favors Spain, the study continues, is the possibility of being able to list on the Latin American Stock Markets in euros through Latibex, a stock market for Latin American securities based in Madrid and which is regulated by the Stock Market Law. Spanish and is part of the holding company Bolsas y Mercados Españoles (BME).
This entity provides these companies, through the issuance of fixed and variable income securities, with an efficient and low-cost access to sources of financing in euros. In addition, it allows European investment to be channeled efficiently towards Latin American markets, which helps European investors to buy and sell shares and securities through a single market, with a single trading and settlement operating system and a only currency, the euro.
In this regard, Jesús González, director of Latibex, explained during the event that the existence of “a securities market throughout Europe, and specifically through Spain”, helps to counteract the lack of information of Spanish and European private investors. , who “do not know in detail where to invest” in the region.
In total, according to Casilda, more than 600 multi-Latin companies operate in Spain “that employ 32,000 people” and that operate in the food, beverage, banking, cement, construction, systems consulting, environment and transportation sectors.
At the same event, Ximena Caraza, general director of the Casa de México Foundation in Spain, assured that “Mexico is the country with the most investment in Spain, by far, especially productive investment.” “Spain is the gateway to Europe, but there has never been a connection as important as there is now, especially in the last fifteen years,” she added.
For his part, the president of the Spanish Chamber of Commerce, José Luis Bonet, warned that, in the current context of “greater protectionism and less multilateralism” and uncertainties generated by “the black swan of the COVID-19 pandemic”, by wars and by geopolitical tensions between two “oligopolistic countries, such as the United States and China”, Europe must “recover its positions” to “stop being an acolyte between two great ones”. To this end, he stated, the rise of multilatinas represents “a historic opportunity” in which “everyone wins” and in which Spain must act as a “natural bridge” to “favor this landing.”
