Confidence is high as funds flock to register with the
Portuguese stock exchange as they target regulated assets and real
Private equity (PE) funds have shown renewed interest in
Portugal in the wake of the troika deal and continue to search for
investment opportunities, instilling confidence in the
country's economy, according to Lisbon-based law firms
consulted by Iberian Lawyer.
Linklaters corporate finance partner Marcos de Sousa Monteiro
says that between 30 and 40 per cent of the M&A deals in
Portugal in 2015 involved PE funds. He adds: "Throughout 2015
and into 2016 we saw a continuous and fairly steady market share
and volume of work triggered by investments and divestments by PE
firms in Portugal." Sousa Monteiro says that private equity
funds are particularly attracted to investments in regulated
assets, as well as real estate opportunities.
Sousa Monteiro adds that PE interest in Portuguese assets is a
boost for the country's economy. "It portrays a high level
of confidence in policymakers that has not been affected by the
country's recent elections," he says. "Some of the
deals we have seen are PE funds divesting, but they are being
acquired by other PE or infrastructure funds, which also
exemplifies the renewed confidence in Portugal." However,
while a continuation of the current levels of PE investment is
expected over the coming months, uncertainty regarding the
stability of the Portuguese government may prevent an increase in
PE deal flow.
The increase in PE investment in Portugal is due to the
country's swollen public-sector debt, according to Duarte
Schmidt Lino, the partner who heads PLMJ's private equity
practice. He says that he envisages PE investment in Portugal
growing because banks will "no longer fund every need of
Schmidt Lino points out that 83 new private equity funds were
registered with the Portuguese stock exchange commission (CMVM) in
2015 and consequently, law firms are seeing a growth in demand from
national and foreign PE funds. He continues: "PE funds are
buying assets not because the Portuguese economy is blossoming, but
because its financial structure is in transformation."
PE is also an important source of financing for companies in
emerging markets, according to Schmidt Lino. "This type of
highly-qualified investor may be essential for Mozambique as it
struggles with a lack of asset management," he says. Schmidt
Lino adds that Angola is facing a "huge crisis and
bureaucratic obstacles and the underdeveloped judicial system will
probably continue to be the main hurdles to the growth of PE
Sousa Monteiro says that PE interest in Angola and Mozambique
has been waning during the last year. "While many of the key
traditional players in the market have continued to look for
investment opportunities, and the market has shown some movement,
our perception is that there is a slowdown in PE-driven deals in
those countries," he explains. This is largely due to the
political situation, as well as the drop in commodity prices, along
with greater uncertainty surrounding the exchange rate. That said,
Sousa Monteiro adds the caveat that there could be an increase in
"distressed-driven" deals in the near future.
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