Few shareholders’ meetings are remembered with such high prior tension as the one held this Thursday by Ferrovial. The exchange of letters between the Spanish Government and the company, the support of the voting advisors for the move or the last minute change in the direction of the vote of Norges Bank are a cackle that covers the background of this operation: Spain loses a of its great international insignia, which prefers to change its registered office to the Netherlands and assume significant reputational damage to keep its passport. And he will leave, except for surprise, with an institutional clash with a red card and leaving several scars.
The first, the argument that one of the reasons for the transfer was the search for a highly stable legal environment. A signing capable of making the markets reflect on what is happening in Spain and that Ferrovial itself quickly qualified. The other, the flight to a ‘paradise’ rated AAA; that is to say, in search of the gold of better financing conditions to remove the extra ‘cost’ of being a Spanish issuer that places debt under the umbrella of an A (S&P), A- (Fitch) or Baa1 (Moody’s) – in bonds sovereigns. The third, that it is a path of no return. Based on the experience we had with Carles Puigdemont’s annulled declaration of independence, once a company decides to leave, it does not usually return. And, unlike the independence movement, Ferrovial is not really attached to his future Dutch passport, but dreams of the American one.
It may be that the socialist government tends towards interventionism, but it is hard to think that one of the PP would be happy with a decision of this type and that they would not have lifted a finger to stop it for the sake of market freedom; although it is difficult to know if it would have happened with the popular ones. The atmosphere has been very heated between businessmen and the Executive in recent years. Rich in general, banks, electricians or proper names such as Del Pino, Amancio Ortega or Juan Roig have starred in some of the most direct darts from Moncloa. Nor is the threat of the Sword of Damocles prosecutor against the company that has been raised in recent days justifiable.
What it’s time now is to temper our spirits and reflect on the reasons that have led us here, if we are taking sufficient care of the Spain brand, the inefficiencies that Europe has when it comes to offering equitable treatment to its multinationals and truly donating Spanish values . Our Ibex 35 is an uncompetitive indicator at the international level, with a small number of values, fiscally mistreated compared to others due to the rate on financial transactions, with a great weight of energy and banking and that does not generate enough hook to become a base on which many financial products are generated.
Listing in the US gives more than 12 times more chances of entering the portfolio of an investment fund
According to data from Morningstar, there are 157 specialized funds (includes all classes and categories) in Spanish equities available to national investors. If we look for US stock funds, the figure shoots up to 1,953 divided into seven categories. This means that listing in the United States gives 12 more chances of entering an institutional investor’s portfolio than if you do so in Spain. And the more investors ‘fight’ to acquire their titles, the more ways to value a company will exist. If, in parallel, you climb the S&P 500 -an aspiration that Ferrovial recognizes-, your visibility is higher; also to attract financing directly on the other side of the Atlantic.
Without going into the regulatory or tax differences that exist between European countries and that cannot be ironed out sooner rather than later, cases such as that of the company headed by Rafael del Pino shows that the integration of European markets is something that has a lot to do with. steps to fix it. The S&P 500 brings together firms from all over the United States, no matter which state, with similar ‘country’ risk. The European Union is a long way from that integration, although there are common indices such as the Stoxx 600 or an effort is being made to standardize non-financial information. In what is important, it is difficult to move forward and the country risk continues to be something that is very present and that indirectly affects companies with a certain passport. We would be much more competitive with markets where European prices were analyzed as EU values and where their truly diversified indices could become reference underlyings for the asset management industry.
If the covid forced the ‘eurobonds’ to see the light, it is still time to take steps towards achieving a pan-European rating, which removes economic reasons for changes such as the one proposed by Ferrovial; limiting the impact of ‘country risk’ on multinational companies. The eu has been working for years to erase it in banking with the still unfinished European deposit guarantee fund, which would be a first step to harmonize risk premiums. Going a little further, perhaps it would prevent large companies that are purely a Spain brand from having to choose between patriotism or financial flexibility at a time when the debt market has taken a 180 turn due to the dizzying rise in interest rates.
If not, the risk of seeing another case like Ferrovial’s will continue to exist. The fact that a large company renounces its nationality is worrying because of what it projects abroad and because of that ridiculous fight to see who wins the fight. Putting the entire State machinery to work as a punishment may prevent some other businessman from copying him, but it will also refocus the prism of how ‘friendly’ Spain is for companies.
With the flight of Ferrovial we lose a relevant asset as a country, let’s not lose sight of it. But Ferrovial gives up his identity and will be stateless when he lands on Wall Street. Small for everyone.