Two new funds focusing on co-investments and social impact were launched this month by Spain’s sovereign wealth fund, Compañía Española de Financiación del Desarrollo (COFIDES), as the country’s government follows France and Italy in catalysing private sector capital for strategic economic development.
Cofides is 54% owned by Spanish public agencies, and 46% owned by private banks including Santander, BBVA and Sabadell.
The government approved an addition to its Recovery, Transformation and Resilience Plan (RTRP) to set up the Co-investment Fund (FOCO) and the Social Impact Fund (FIS). Seeded with US$2.2 billion in capital, FOCO will seek to attract foreign investment – including other SWFs – in Spanish companies to advance the RTRP objectives, including energy transition, digital transformation, sustainable mobility, biotech, and sustainable agriculture. Meanwhile, the US$500 million FIS “aims to reinforce the Spanish impact investing ecosystem with sustainable investments that generate a positive social or environmental impact.” It will invest directly into Spanish companies with social and environmental goals as well as impact investment funds.
Chairman of COFIDES, José Luis Curbelo, said, “FOCO will strengthen the sustainable and inclusive growth of the Spanish economy, increase the social and economic resilience of Spain and promote its ecological and digital transformation.
“FIS shall reinforce the growth of the Spanish environmental and social impact investing ecosystem, acting as a catalyst to attract third-party resources to this segment, which contributes to sustainable and inclusive growth of the economy and is gaining importance both at a national and a global level”.
FOCO and FIS will join a suite of funds with different mandates, organized under the COFIDES umbrella, including the US$1.3 billion Fund for Foreign Investment (FIEX), the US$100 million Fund for SME Foreign Investment Operations (FONPYME), the US$1 billion Fund for Development Promotion (FONPRODE), and the US$1 billion Fund for recapitalizing companies affected by Covid 19 (FONREC). The establishment of the new funds will take COFIDES’s total AUM to more than US$6 billion.
FOCO could build on existing deals signed with Middle Eastern SWFs. In October 2018, COFIDES established a 50:50 joint venture with Oman’s State General Reserve Fund (SGRF), which is now the Oman Investment Authority (OIA), to establish the Spain Oman Private Equity Fund (SOPEF). With targeted capital of EUR200 million, the venture currently sits in FIEX’s remit. It aims to help and support the internationalization of Spanish companies, mainly in the GCC area, as well as to promote the transfer of know-how of Spanish companies into Oman and its neighbors. FOCO is likely to support an inverse model of SOPEF, seeking to draw in foreign capital to support mid-sized companies develop their businesses in Spain.
COFIDES has also signed MoUs with the Qatar Investment Authority (QIA) and Abu Dhabi SWF Mubadala to catalyze foreign capital, chiming with FOCO’s objectives. In February 2022, the Spanish SWF signed an agreement with Mubadala to identify potential co-investment opportunities worth around US$500 million in Spain and strengthen the economic and investment ties between the two nations, in support of the RTRP. Last May, QIA followed suit with an MoU with COFIDES, as part of a EUR5 billion investment pledge by Qatar’s ruler Emir Tamin Bin Hamad Al Thani – again, in line with the RTRP mission.