2023-09-16 04:03:58
An operation as unexpected as it was far-reaching turned the Spanish business landscape upside down last week. In a movement orchestrated with the greatest of secrecy, the operator Saudi Telecom (STC) acquired, through the investment bank Morgan Stanley, 9.9% of the main national telecommunications company, Telefónica. STC, the sector leader in the Middle East, has disbursed 2.1 billion for this participation, which has yet to receive approval from the Government. A respectable amount but, at the same time, modest if there is little focus on STC’s main shareholder: the Saudi sovereign fund (PIF), which manages assets around the world valued at 555 billion euros.
These investment vehicles have been launched in recent years to acquire shares in Spanish companies such as IAG, Iberdrola or Cellnex to enrich the public accounts of those countries that have raised them. Norway, Qatar, France, Australia, China and Singapore are some of those that have an instrument administered by their respective States to invest and manage their resources for strategic and long-term purposes. Spain is not on the list, however. Would it be possible for you to join this select club? The answer, according to experts, is that it would be more desirable than feasible.
Natural resources
The most recognized funds at a global level have been effectively nourished by natural resources, mainly derived from gas and oil, as Cristina Noguera, professor at the EAE Business School, recalls. However, “this does not prevent a sovereign fund from being able to draw on large commercial or financial operations or large stock market operations or even other operations,” she adds. There are examples of this. The Australian sovereign fund, the Future Fund (FF), for example, was created by the Government of this country with some 35 billion euros from certain budget surpluses and the proceeds from the privatization of the telecommunications company Telstra. Now, its assets under management are around 100 billion. France also has its own fund, CDC, which manages nearly 1.3 billion euros, although it has a very long history, as it was founded in 1816.
What happens in the Spanish case, as Noguera explains, is that the national public accounts are in for little joy in the short and medium term. «Spain has a very unhealthy balance of payments and quite unaffordable levels of public debt that exceed 100% of GDP. With these parameters, it is difficult to propose any sovereign fund today,” she summarizes.
There is no surplus
Doctor in Economics Juan Ramón Rallo agrees with the arguments of the EAE professor. «It is not viable at all. We don’t have a budget surplus,” he says. In the absence of budget surpluses like those used by Australia, Rallo does not consider that it makes sense to go into debt to raise an instrument of this nature even though, as Noguera explains, it could be “a very valid and viable alternative to contribute to the generation of resources.” additional payments for the payment of future pensions, which no one doubts anymore, are more than at risk.
Daniel Lacalle, also a Doctor in Economics, professor of Global Economics and Finance and manager of investment funds, is just as blunt as Rallo. In his opinion, it is an “unviable” option as well as a bad idea if it has to be financed with debt, a hindrance that Lacalle has been warning about for a long time because it can shake the entire Spanish economy if measures are not taken. to reduce its historical level, which already exceeds 1.5 billion euros.
Economist Javier Santacruz also agrees that the key to being able to raise a fund of this type is to have a budget surplus because, “if not, they would be taking money from one place to put it elsewhere.”
But in addition to the difficulties that Spain would have in finding resources with which to feed the fund, some of the economists consulted also warn that the Spanish political class has given few reasons to trust that a vehicle of these characteristics would be managed appropriately. Noguera assures that, in addition to missing the main ingredients, such as the cleaning of the balance and the even greater cleaning of the public debt; Also missing is “the main and most basic, but at the same time, most complicated of all the ingredients, which is a radical change in mentality and cultural turn of our national leaders.” Lacalle does not even want to hear about a tool that could be managed by politicians and that brings to mind the worst moments of the State Society of Industrial Participations (SEPI). This company is through which the State participates in some companies, although it is not always guided by criteria of economic profitability as sovereign funds do. Right now, it owns stakes in companies such as Enagás (5%), Hispasat (7.41%), Airbus (4.12%), Redeia (20%) or Indra (27.99%). In addition, it controls 100% others such as Navantia.
SEPI headquarters in MadridlarazonSEPI
The closest thing Spain had to a sovereign fund was the Social Security Reserve Fund. Created at the beginning of the century, it was fed by the surpluses generated by Social Security to theoretically guarantee the sustainability of the public pension system. Its coffers reached up to 66,000 million euros. However, with the crisis and subsequent pension increases, it practically evaporated. To the point that it closed 2022 with 2,859 million, which the Ministry of Social Security expects to increase to 5,347 million when this year closes thanks to the contributions of the Intergenerational Equity Mechanism (MEI) and the surpluses of the Mutual Security Collaborators. Social, after providing the stabilization reserve for professional contingencies.
The so-called “pension piggy bank” can invest in public debt of the German, French and Dutch States and in assets issued by the ICO (Official Credit Institute). Also in Spanish debt. In fact, as Santacruz recalls, during the hardest years of the financial crisis, except for some auctions, the Spanish Treasury.
Now, the Government has also promoted publicly promoted employment pension funds (FPEPP) which, aimed primarily at small and medium-sized companies, could in the long run become a new type of sovereign funds also to guarantee pensions, although The contributions and management of these vehicles will be private, as Santacruz explains.
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