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Portugal starts love affair with private equity

Portugal starts love affair with private equity

LISBON: Portugal’s economic recovery is making it a hot destination for the rich and famous like Madonna as well as tech entrepreneurs and now private equity is looking to participate in the upswing.

Private equity investments in Portugal have more than tripled to 7 billion euros (£6.14 billion) in the past three years, according to data by industry consultant TTR, as investors flock to a rebounding economy hungry for capital.

The 2017 data includes some big deals, such as a 1 billion euros investment by U.S. firm Lone Star, but shows a rise in smaller ones as private equity shifts from distressed assets to healthy companies riding the country’s economic growth wave.

Portugal’s economy is set to grow 2.2 percent this year, four years after it exited a bailout and seven years since it faced sovereign default, one of several euro-zone countries whose indebtedness had threatened the single currency.

“The sector is now pretty dynamic,” said Joao Rodrigo Santos, a partner at Lisbon-based Atena Equity Partners. Atena is raising money for a new 40 million euro fund which will take its total assets under management in Portugal to 100 million euros.

Explorer declined to disclose its return on the investment but it was sold for several times the original investment. It is raising 125 million euros for another fund.

Luis Quaresma, partner at Iberis Investment, which targets both Portugal and Spain, said his firm was also raising money for a fund that would make investments of 5-25 million euros.

HCapital, which manages 75 million euros, is looking to buy four companies this year and raise a new fund in 2019.

 

The government, wary of the resurgent economy embarking on another debt binge, has thrown out the welcome mat for private equity firms, offering to partner with private investors to lower financing costs as well as extending tax concessions.

Lisbon has also created a scheme, Capitalizar, which funnels private equity to smaller firms that struggle to obtain competitive finance from banks still burdened by bad loans.