In times of rising interest rates and high debt costs, turning to shareholders to fund a company’s growth plans can be a good idea, as long as the owners show the necessary patience and enthusiasm.
This is one of the trends that has been imposed in recent months among some of the largest companies listed in Spain, convinced that it is worth demanding an effort from shareholders in the name of future profitability.
There have already been 49 capital increases in listed companies since the beginning of the year, compared to 40 in 2023.
Capital increases, often used in times of crisis, are now being launched to address transformational projects. This is the case for BBVA, Merlin Association, construction company Sacyr, electric charger manufacturer Wallbox, real estate company Bankinter, as well as small businesses.
According to the latest data from the stock market operator BME, by the end of August there had been 49 capital increases among companies listed on the continuous market, more than 40 in the past year as a whole. Not all of them are aimed at growth: OHLA has done one to clean up its balance sheet, and companies like Iberdrola do it on a recurring basis to distribute part of their profits in the form of shares.
Of all the expansions that will grow, the most notable is that of BBVA. It turned to shareholders and not its own money to increase its capital by 19%, for an amount close to 11.5 billion euros, with the aim of dealing with the stock exchange for the public offering of Banco Sabadell. On July 5, it passed the test of success, convincing shareholders, and approving the expansion at an extraordinary general meeting. It already has the backing of capital, including important international funds that also have a presence in Sabadell.
BBVA’s expansion is, given its size, the largest carried out in Spain for transformational purposes. In 2021, Cellnex carried out another macro operation of this type, although it was not sufficient in terms of amount: it issued shares worth 7 billion euros to start buying and installing telecommunications towers throughout Europe.
Socimi Merlin also surprised in July with a significant capital increase, of around 1,000 million euros, to pay for the development of data centers, one of the most promising real estate management assets to achieve profitability. For this reason, it convinced Santander Bank, its main shareholder with 24.5% of the capital, as well as Nortea Capital, owned by businessman Manuel Lau, who owns 8.17%.
In May, the construction company Sacyr increased its capital by 9.6% of its shares, in this case receiving 222 million euros and allocating it to growth by investing in the recently adjudicated highway concession projects. Manuel Lau appears again: Nortia owns 5% and has also invested money in expansion.
They are not listed, or if they are, they are not doing so in Spain, but other important companies have chosen the same path. Palatino, the residential real estate company of Bankinter, increased its capital by $121 million to grow in new projects, while Wallbox, which is traded in New York, did so at the end of July for $45 million “to accelerate the capacity to manufacture and sell more of its chargers around the world,” he explains. Another case is the operator Parlem, which took four million to grow outside Catalonia and Valencia.
There are also examples of companies turning to shareholders to avoid difficulties. The most significant is OHLA, which raised $150 million, backed not only by its main owners, the Amodio brothers, but also by businessman José Elías.
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