Symbolic but significant. Grifols has achieved the first support from a large investor since the crisis of confidence broke out with its investors on January 9, the date on which the Gotham City report was published, which called into question its accounting practices and good corporate governance. multinational Since that day, the pharmaceutical company’s price remains under pressure with a cumulative drop that exceeded 40%, although it has been reduced to 25% now, as the calendar progresses and after the Grifols family has abandoned management.
Some investors trusted the word given by the current board headed by Thomas Glanzmann about the non-existence of irregularities that Gotham denounced. Most analysis firms have closed ranks, reaffirming the positive reports they had before the episode. The CNMV left its position up in the air by asking for time to analyze all the documentation it has been requesting from Grifols in the last month. However, nothing but words had been produced and no major investors had taken action…until now.
Brandes, a reference for ‘value’
A large American investor has given a vote of confidence to Grifols. Brandes Investment Partners, a manager founded by Charles Brandes and with nearly $30 billion in assets under management, has placed the Spanish pharmaceutical company as one of its main investments, according to the US SEC registry. Specifically, the firm has declared the purchase of half a million ADRs (dollar certificates for foreign companies) and ten million class B ordinary shares, up to 14.05 and 13.48 million titles, respectively.
In this way, Brandes now controls 10.5% of all class B shares (if I vote but with preferential economic rights) of Grifols. Also taking into account the class A shares, the participation of the American manager has increased from 2.4% to 4% of the capital of the Catalan company. The import of the investment in the increase in participation amounts to about 100 million dollars (90 million euros) although the dates of the operations are not stated.
Brandes’ entire investment (27 million securities of two types) at current trading prices is valued at 270 million. In this way, Brandes is positioned as the group’s third largest independent shareholder behind Capital Group (5.1%) and BlackRock (4.2%), although always behind the four companies linked to the Grifols family: Deria ( 9.2%), Ponter Trader (7.2%), Ralledor (6.2%) and the controversial Scranton Enterprises (8.7%), owned by 22 shareholders from the family clan, corporate management, board of directors and former employees.
As you will have seen if you have read this far, the complexity of Grifols’ capital structure is also one of the keys to the current crisis it faces. The pharmaceutical company has a dual structure with two types of shares: class A shares, which include political and economic rights such as dividends, along with class B shares, which do not have voting rights but do have additional economic rights such as the possibility of redemption, preferential liquidation. . hey preferred dividend.
German bank. Grifols has two different ADR issues. The program that was issued in 2009 on the pharmaceutical company’s class A shares with a conversion equation of 2 ADR for every 1 share with voting rights.
The other ADR program is linked to the purchase of Talecris in 2014 and its conversion formula is 1 to 1 with the B shares. These instruments are the ones in which both Capital Group and Brandes and other investors such as Millenium, one of the large US hedge funds. It is also one of the main holders of the preferred shares of Banco Santander, one of the main financiers of the Grifols Roura family both through Deria and Scranton Enterprises.
Shorts and loans from Capital Group and BlackRock
Brandes’s movement went against the current. The signs of support have been scarce with sales from Capital Group and BlackRock, which controlled close to 11% of Grifols before the current crisis, and have also become necessary collaborators of the ‘hedge funds’ that operate short by lending part of their titles.
Giants like Ako Capital and the aforementioned Millenium had short positions of more than 0.5% of the capital before the fateful January 9, but they undid them when the ‘hedge fund’ associated with Gotham City (General Investment Partners) closed its own after giving a ball Now they only remain among the bears of Grifols Qube Research (-1.1% of capital) and Worldquant (-0.6%).
The uncertainty is maximum since Grifols still has to present its 2023 annual results in two weeks, in addition to reworking the financial information about its debt structure that is not clear in the eyes of investors, according to sources explain to ‘ Market information sources.
The company has defended that both the accounting treatment applied to the subsidiaries it sold to Scranton, as well as its debt ratios, are in the public domain and were notified to both the CNMV and the SEC. These are the companies Haema AG and BPC Plasma, which have been owned by Scranton since 2018, but which Grifols accounts for on its balance sheet in accordance with IFRS 10 because it has an irrevocable recovery option on both and maintains management.