In the past few years, Spain’s COFIDES has become a very active manager of Sovereign capital, financing over 1,000 projects in over 100 countries and establishing partnerships with GCC funds including OIA, QIA and Mubadala. We had the great pleasure of talking with its Director-General, Rodrigo Madrazo, about the fund’s current activities and future strategy.

[GSWF] COFIDES is a unique entity that manages several pockets of capital from the Government. How do you define yourselves and what are your main activities?

[COFIDES] We are a manager of Sovereign wealth, with 95% of our capital off-balance sheet. We pursue three distinct missions: (i) support to Spanish companies going international (US$ 1.4 bn); (ii) development promotion or FONPRODE (US$ 1 bn); and (iii) recapitalization of companies affected by Covid 19 or FONREC (US$ 1bn). The latter has been our focus for the past year and goes to show our versatility, after recapitalizing 89 Spanish businesses.

[GSWF] COFIDES’ size is limited if compared to Spain’s GDP and reserves. Do you think your balance sheet should be bigger?

[COFIDES] Our mandate is very specific and we focus on additionality: providing capital to projects that struggle to find it elsewhere. ICO, which is one of our shareholders, is the institution used by the Government to inject additional funding in times of uncertainty.

[GSWF] Remarkably, you are currently supporting 460 projects in over 100 countries. How do you manage to do that?

[COFIDES] It is a very broad portfolio of small tickets, which requires a lot of support from our legal, environmental and other experts. Around 40% of our projects are in Latam (Mexico, Chile, Colombia), and we have a strong focus on roads, renewables and industrials. We offer the type of financing that is hard to find in the market, normally via equity or hybrid capital. For example, we like to write equity checks with a 8-10-year put option, or to provide participative loans with the interest rate linked to the company’s results.

[GSWF] What have been the key challenges and learnings of the Spain Oman PE Fund (SOPEF) set up with Oman’s OIA? Will the agreements recently signed with Mubadala and the QIA follow the same mechanics, with a separate sub-fund?

[COFIDES] SOPEF has been very successful in putting together the interests of two very different funds. We launched SOPEF in 2018, three years after our initial agreement with the OIA, and most of the capital has now been invested via Spanish PE firm MCH. We are exploring a similar path with Mubadala and QIA, by co-investing in the first instance, and then considering other forms of cooperation.

[GSWF] Our 2022 GSR Scoreboard highlighted COFIDES’ leadership on ESG, with a 10/10 score. Can you comment on it?

[COFIDES] COFIDES has been a true pioneer around sustainability: we launched our environmental internal process in 2001, when it was still unheard of, and three years later, we launched our social internal process, too. We have succeeded in managing ESG risk and we now want to take one step further by transforming responsible investment into impact investment. In that context, we will soon launch COFIDES Impact Program, which will introduce sustainability targets linked to SDGs in the price setting mechanism of our investments.

[GSWF] COFIDES currently employs 87 staff – is that an optimal size and will you consider any office overseas?

[COFIDES] Our Strategic Plan 2022-24 foresees an increase to 150 staff by 2024. So far, we have managed to fulfill our mission but it is true that the staff has made a huge effort. We aim to keep our efficiency at sustainable levels through new recruits and our current outsourcing policy, e.g., we have relied on 14 consultancies, 12 legal firms and one rating agency for the management of FONREC. In terms of offices, we have had offices in Mexico, Morocco, and China in the past; however, the dealflow origination was not as good as expected and we consequently decided to shut them down. We are currently assessing the possibility of re-opening the Moroccan office.

[GSWF] How would you summarize the past four years in COFIDES and how do you compare them to your previous experiences in the Ministries of Economy and Industry & Trade? What are your ambitions in the next five years?

[COFIDES] COFIDES is a very interesting institution that has provided me with a valuable and practical exposure to economies and markets globally, especially when compared to my previous roles.

In the coming years, COFIDES will become a truly green financial entity through the pursuit of three very ambitious goals:

  • Carbon footprint reduction and commitment to net zero emissions

  • COFIDES Impact Program

  • 30% of new projects in 2022-2024 will be climate investments

This year, we are expecting COFIDES to multiply its capacity by five times, by investing US$ 1 billion in over 140 different transactions.

Related funds COFIDES