Jorge Llorens: "We want to provide the highest quality coverage to financial sponsors" March 31, 2014
Jorge Llorens: "We want to provide the highest quality coverage to financial sponsors"
In September 2011, BBVA decided to create a Financial Sponsors team in light of the growing importance of this type of investor in the global economy, in particular in the areas of infrastructure and energy. Jorge Llorens heads up this team, which provides a professional and dedicated coverage to these clients and has specialists in London, Madrid, New York and Mexico.
Q: Why has BBVA decided to create a special dedicated financial sponsors team?
The main reason was to provide better quality coverage to these clients, helping them to identify corporate and project investment opportunities, providing advisory services, financing these investments and covering their associated risks and requirements. The financial sponsors client segment is hugely attractive because it accounts for around 40% of the investment banking fees paid to the market, given the weight of these investors in the economy. This segment is also a heavy user of investment banking products and rotation of its investments is relatively high.
In addition, a specialist coverage of these clients also helps BBVA to deliver a better service to its corporate clients, given these segments exceptionally strong links in today's world, for example, joint participation in consortia, the sale of corporate assets to financial sponsors, etc. Sound knowledge of, and a strong relationship with, financial sponsors is vital.
Q: What is the profile of the clients sought and what products are offered?
BBVA focuses on clients that are very active in the main markets in which the bank operates: Spain and Portugal, the US, Mexico, Colombia, Chile, Peru and Turkey in particular. Other key factors are reputation and the fund's investment success in the past.
Regarding type, there are private equity, infrastructure and energy, sovereign and pension and credit and real estate funds.
We would like to support these clients and for BBVA to be one of their benchmark banks in the key markets where the bank has a strong capacity. With this in mind, we provide these clients with M&A advisory services and investment tips that are a good fit with their objectives and which enable them to stand out and steal a march on their rivals. We also provide financing for these transactions, seeking a senior and structuring role for BBVA and also maximising the additional business that this capital obtains a return on (bond issues, transactional business, derivatives, etc.).
Q: What prospects are there for growth in the transactions in which financial sponsors are involved?
Funds currently have a very high level of available liquidity for corporate and project investment, an estimated €1,500 billion globally. To this must be added the debt incorporated when making these investments, so the total capacity for transactions is huge. Furthermore, the weight of this sector in the total economy in many of the key countries where BBVA operates is still much smaller even than in other emerging economies: in Mexico, for example, financial sponsor transactions represent just 0.03% of GDP compared with an average of 0.13% in emerging countries.