The ‘new conquest’: Why Latin American companies are racing to invest in Spain

“We are seeing the first waves of a tsunami.” This is how businesswoman Núria Vilanova, president of the Alliance for Ibero-America Business Council (CEAPI), describes Spain’s growing allure for large Latin American companies. This week it emerged that the Mexican group Besant has reached an agreement to buy an emblematic building located on Madrid’s elegant Alcalá street for €100 million ($107 million). It is just the latest example of how capital is flowing in from Latin America. It started a little over a decade ago with purchases of luxury homes in Madrid’s upscale neighborhood of Salamanca and other exclusive areas of large Spanish cities. But in recent years, the fever to invest in Spain has skyrocketed. The Mexican billionaire Carlos Slim, with his participation in the infrastructure multinational Ferrovial; and the Amodio family, which has invested in construction giant OHLA, are just some of the best-known names, but there are many more.

“I am a believer in Spain,” a prominent Colombian businessman assured a small group of journalists this week to try to explain the growing attraction. “Everyone wants to go there,” he added, gesturing to other executives dressed in white guayaberas, drinks in hand, at the welcome cocktail at the annual CEAPI congress held in Cartagena de Indias, Colombia. This organization—which invited several media outlets, including EL PAÍS— brought together more than 400 entrepreneurs from both sides of the Atlantic to strengthen ties and find investment opportunities and new lines of business.

Spain has established itself as the second destination for Latin American companies, only behind the United States, according to the Global Latam 2024 report. Statistics show that 58% of all this investment comes from Mexico, which was the fifth largest investor in Spain in 2023. The accumulated investment of Latin American companies in Spain now stands at €66.9 billion ($71.8 billion), according to the report, prepared by ICEX-Invest in Spain and the Ibero-American General Secretariat (SEGIB).

The study, published just a few weeks ago, shows that last year Latin American companies allocated €2.8 billion ($3 billion) to Spain, an increase of 138% compared to the previous year. “It should be stated that the interest shown by Latin American companies in the Spanish market, in many cases with the ultimate objective of covering the European market, is growing, and that Latin American capital is already a very relevant part of the Spanish economy and its productive fabric,” says the study.

Spain is having the privilege of educating many of the elites of Latin America, what the United States did before this. Now Spain is taking over

Núria Vilanova, president CEAPI

Carlos Vargas, a Peruvian entrepreneur, says that he has just won a contract for one of the cargo terminals at the Adolfo Suárez Madrid-Barajas airport, through Andino Investment Holding, the group he presides. He explains that he has established the foreign headquarters of his company in Madrid. “It’s where you need to be,” he says. Vargas defends that Spain is not only the gateway to the European Union, but also a country with stability and security. “We share a language, culture, religion and the use of Roman law.” Another investor notes that Spain’s problems, compared to those of Latin American countries, “are small.” And he explains: “We had a huge inflationary crisis. Prices changed up to three times a day. We have more economic and political instability... It is true that we also have more opportunities, but many more risks.” Investing in Spain is a way to balance the portfolio, even if the profits are smaller.

Latin America’s security crisis is also a factor, according to several participants at the event. “It is good to have one foot in Spain, a country that is much safer than any Latin American capital. Here we have to drive around in armored cars and move carefully,” says the owner of a large company who assures that he spends more and more time with his family in Madrid.

Added to this is the fact that doing business in Spain provides an open door into the EU market and beyond. Vilanova notes that Spain has proven to be “a very effective springboard into other European and African markets.” A survey of 23 Latin American companies that have recently landed in Spain reveals that the two main reasons for choosing this destination are its geographical location, due to its proximity to markets such as Europe and Africa (70% of the total), and the common language and cultural similarities (78% of those surveyed), according to the Barometer of Latin American investment in Spain, prepared by CEAPI and ICEX.

The study analyzes the case of three Latin American companies that made the leap a few months ago. One is the Colombian group Trinity, which this past spring closed the purchase of the network of perfumeries and household products of the Dia supermarket chain. “I have no doubt that investment by Latin American companies in Spain is going to increase,” said Omar González, president of Trinity, who described the rush as “a new conquest.”

One of the leading figures at the gathering in Cartagena de Indias was Jaime Gilinski, owner of the group that bears his last name, and whose companies are said to have a value equivalent to 20% of Colombia’s GDP. “We are looking at different opportunities all the time in different sectors and in different countries, not just in Colombia.” Gilinski has experience in Spain, where he was one of the largest shareholders of Banco Sabadell, but he sold his stake years ago. Other outstanding individuals included Stanley Motta, president of Copa Airlines and the largest fortune in Panama; Paola Luksic, member of one of the most powerful families in Chile, owners of the largest copper mines in the world and with interests in various sectors; and Isabel Noboa, founder of the Nobis Group, the most important holding company in Ecuador with a presence in the agri-food, real estate and industrial sectors.

After asking about a dozen businessmen of various nationalities, including Spaniards, about why Spain is so attractive for Latin American investors, there was a common story that emerged besides the better security conditions, more attractive financing, more developed capital markets and greater economic and monetary policy stability. Many entrepreneurs also describe a story in which, after the 2008-2012 financial crisis, Spanish companies were forced to divest themselves of their businesses in Latin America. This left the field open for local companies, which grew rapidly, occupying the space that had emerged in banking, telecommunications, distribution and infrastructure. But the markets of the Americas are fragmented, explains Sergio Díaz-Granados, president of the Development Bank of Latin America (CAF). There is hardly any collaboration between countries, which have administrative and legal barriers to investment. “The businessmen here are owners of their own groups. They have a lot of money. A Latin American millionaire has much more money than a Spanish millionaire,” notes a Spanish businessman. “Their countries are becoming too small. They have a fragmentation problem. They can’t climb any further. They need to look for space to expand and Spain is the ideal destination,” says a Spanish executive from a company listed on the blue-chip Ibex index.

The fact that Latin American entrepreneurs own their own companies also plays a role. They have family offices, corporate instruments with which they manage the family’s and corporate assets, for which they seek a certain stability. That is why they buy homes in the Madrid neighborhood of Salamanca through these instruments, or prefer to make their investments in Spain through them.

Added to this is the rise of business schools in Madrid. “Spain is having the privilege of educating many of the elites of Latin America, what the United States did before this. Now Spain is taking over,” Vilanova says. Before this, scions of wealthy families were sent to Miami or other American universities, but now the Madrid campuses are welcoming many Latin American students who end up making contacts and doing business in Spain. “They start with a small business, they show that it can be successful, and the family offices end up asking them to invest the family’s money in Spain,” adds the Spanish businesswoman.

“The fact that there is already a large network of entrepreneurs from all countries, from the smallest to the largest, from Paraguay and Uruguay to Mexico or Brazil, means that there is a successful network that encourages other young people who also become entrepreneurs,” adds Vilanova. “I think it will receive more relevant waves of Latin American investment and that it is very important for Latin America.”

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition