The first edition of The District, an international event that puts real estate projects in contact with investors and funders from all over Europe, took place in Barcelona from 19 to 21 October. Altria Corpo was present in these three days contacting debt funds specialised in financing real estate projects.
The sessions that took place highlighted the growing and important role of alternative financing to carry out all types of real estate projects, from residential to logistics, industrial, retail and hospitality, or hotels, in a context of economic recession and credit crunch.
It is worth highlighting the dynamism of this sector despite the difficult macroeconomic circumstances, with new formulas such as Build to rent, coliving, senior living, student residences, data centres, etc., making headway. Innovative financing formulas were also presented, both by alternative funds and the so-called proptechs, as well as the possibilities offered by blockchain technology and the tokenisation of assets and debt.
Altria Corpo took the opportunity of these days to strengthen its relationship with many funds and will continue to expand its already extensive list of real estate financing solutions for the benefit of its clients.
The Governor of the Banco de España, Pablo Hernández de Cos, gave a presentation on 4 October entitled “The new economic scenario for banks”. After reviewing the various economic indicators, the Governor stated that “the potential impact of the current climate of uncertainty on the banking sector calls for extreme prudence“. For Hernández de Cos, while gross margin will increase in the short term due to the rise in interest rates on both new and existing variable-rate loans, funding costs (deposits and debt instruments issued in the financial markets) will also be pushed up.
The Governor warned that “the adverse effects of the current and foreseeable environment on the ability of households and firms to meet their financial obligations will manifest themselves mainly over a longer horizon (one to two years ahead)”. As a consequence, banks will have to increase their provisions to cover potential losses.
The latest Financial Stability Report, published in May 2022, includes simulations of the impact on banks of a scenario in which some of the current risks materialise: additional energy price hikes and more persistent bottlenecks in global trade, leading to further spikes in inflation and a further tightening of monetary policy, together with a deterioration in agents’ confidence and increased risk aversion. The results show that the sum of the different transmission channels in these stressed scenarios would generate a negative impact on bank solvency of between 1.8 percent and 3 percent for Spanish banks as a whole. By component, while net interest income would increase, the deterioration in the credit quality of loans to the private sector would lead to greater losses. Moreover, the simulated rise in interest rates entails a slight reduction in the value of bond holdings on banks’ balance sheets.
Hernández de Cos concludes that we are in the midst of a very complex macro-financial situation, characterised by high inflation, tighter financing conditions and heightened uncertainty, which has already led to a slowdown in economic activity in the third quarter and a general downward revision of growth prospects for the coming quarters. In this context, although the starting point for the banking sector is positive, extreme caution is needed and risks, which can worsen rapidly, need to be closely monitored and new stress scenarios need to be envisaged. All this leads the Governor to recommend banks to be very careful in their provisioning policy and capital planning in the coming quarters.
The consequence for companies seems clear: further credit tightening by banks and a rise in the financial cost of their debt. Expanding the number of non-bank financial providers and seeking more liquidity in anticipation of this tighter scenario seem sensible advice at this point in time.
Since the beginning of 2022, Spanish companies are suffering various shocks that compromise their economic viability and financial survival.
On the one hand, there is the sharp rise in energy prices caused by the war in Ukraine and Russia’s reprisals. This increase in energy prices causes an increase in production costs that can rarely be passed on to the price, so that the reduction in margins is a reality.
General and underlying CPI evolution
Another variable of great concern is the high inflation experienced over the past year, which does not seem to be abating. The generalised rise in prices, attributed both to the monetary expansion of recent years and to restrictions in the supply of goods resulting from the pandemic and the war, is particularly affecting small and medium-sized enterprises, which are generally unable to pass on this rise in the prices of their raw materials and supplies.
Evolution in Federal Reserve and ECB interest rates
High inflation has motivated the latest interest rate hikes by the European Central Bank. Everything seems to indicate that, after the last increase of 0.75%, there will be further increases in the coming months. This will have a direct impact on all variable rate loans that companies have, as well as tightening the risk concession criteria of financial institutions.
Therefore, three risks (rising energy and raw material costs, high inflation and rising interest rates) that companies must manage and whose recipe in the financial sphere is far from simple, but which must necessarily involve diversification of sources of financing, both bank and alternative. Altria Corpo is, as always, there to help in this financial diversification.
The wide variety of financial solutions obtained is the main feature in a year marked by the exit of the pandemic and the restriction of bank credit in a context of inflation and probable recession.
The financial consultancy Altria Corpo, which specialises in advising medium and large companies on financing, raised 50 million euros in financing for its clients in the first half of the year, with more than 30 transactions successfully advised.
In a context of great difficulty in accessing bank credit, the firm has obtained very varied and innovative financial solutions, both from the banks themselves and from alternative financing.
Some of the most significant operations have been the Sale&Lease-back of an industrial building for a company in the metal sector, for which the company obtained a liquidity of 2.8 million euros to undertake its business plan; a mortgage loan of 1. 2 million second-ranking mortgage loan on its facilities granted to an industrial company by a public financing institution; a loan of 5 million euros to a plastic packaging company granted by a debt or direct lending fund; the financing of the acquisition of an industrial company in a 50% leveraged operation thanks to the ICF; and the advisory and execution of a 7.2 million euros syndicated loan for an industrial company, with the participation of seven financial institutions.
Likewise, in a difficult context for many companies, after two years of reduced income due to the pandemic, Altria Corpo has advised some clients in the novation of Covid-19 loans with ICO guarantee, in the search for alternative financing to complement bank financing and reinforce the liquidity of companies, or in the processing of operations of the Fund for the Recovery of Companies affected by Covid-19 (FonRec) managed by Cofides. Of the latter FonRec operations, it is worth highlighting the financing by means of personal loans and equity loans for a total amount of 4,300,000 euros to an important catering group.
As Ramiro Lama, Altria Corpo’s partner and head of financing, points out, “it is in operations of more than one million euros and where companies have more difficulties in obtaining financing, where Altria Corpo can give more added value to the relationship with its clients. Altria’s in-depth knowledge of all the financial solutions available on the market and its ability to structure a proposal adapted to each need are the reasons why medium-sized companies find in Altria the right partner for their search for financing“.
The first half of 2022 also saw important milestones for Altria, such as the strong boost in activity in Madrid with the incorporation of Rubén Huertes and Fede Suárez, and the consolidation of the alliance with PKF Attest in areas that complement Altria Corpo’s offering, such as Corporate Finance, Debt Capital Markets, Technology and Legal and Tax Advisory, among others.
Altria is a Barcelona-based firm founded in 2014 by Albert Gumà. Its clients are medium and large companies, to which it offers its expertise in all types of debt and equity financing, and access to more than 170 financial providers including banks, alternative financing, public financing, debt funds and other instruments. In its almost ten years of existence, Altria Corpo has positioned itself as a benchmark in the search for financing for medium and large companies, with an accumulated amount advised of more than 350 million and more than 600 operations. The scope of the companies advised covers the whole of Spain, with a concentration in Catalonia, which represents 70% of the total volume advised.
Rubén Huertes, Federico Suárez and Álex Pardillos, new consultants with proven experience to continue leading the sector.
Rubén Huertes
Altria Corpo has just reinforced its team in the Corporate Finance Area with two professionals who will drive the business from its Madrid office. Rubén Huertes and Federico Suárez have a recognised track record in the financial sector and have in-depth knowledge of the corporate finance business in the medium and large company segment.
Rubén Huertes has spent 12 years managing corporate banking clients at Banco Santander and AKF Bank, where he was responsible for the factoring business. He holds a degree in Business Administration and Management from the Universidad Rey Juan Carlos in Madrid and a Master’s Degree in Commercial Banking from the Universidad de Alcalá de Henares.
Fede Suárez
Fede Suárez joins Altria Corpo after more than 20 years of successful career at Banco Santander and Banco Sabadell, where he held senior positions in the corporate business. In recent years he has promoted the management and financing of real estate assets at Aliseda and has advised on the financing of companies and real estate projects. He holds a degree in Business Studies from the San Pablo CEU University in Madrid and has complemented his training with a Master’s degree in Finance and several specialised courses in corporate financial advice.
Alex Pardillos
In addition, the Barcelona team, which already had 14 people between consultants in the corporate area, the analysis team and a team specialised in external financial management and turnaround processes, incorporates a new consultant. Álex Pardillos has more than 7 years of professional experience in different roles in financial and strategic consultancy as well as in the management of Corporate and Business Banking in entities such as Banco Santander or Targobank. Álex holds a degree from the University of Barcelona and has complemented his academic training with certifications in the financial field at the University of Cantabria, IE Business School and EADA.
We welcome these new additions and wish them every success at Altria Corpo.
Altria Corpo is a financial consultancy for medium and large companies, founded in 2014 by Albert Gumà and with offices in Barcelona, Madrid and Luxembourg. Its main services are advice on debt and equity financing, and access to more than 160 financial providers including banks, alternative financing, debt funds and other instruments. In its 8 years of existence, Altria Corpo has positioned itself as a benchmark in the search for financing for medium and large companies, with an accumulated amount of more than 350 million euros and more than 500 operations financed. The scope of the companies advised covers the whole of Spain, with a concentration in Catalonia, which represents 75% of the total amount advised.
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