Financial Sponsors, key drivers of the global economy and energy transition

The Financial Sponsors sector is closely linked to the M&A dialogue, focusing on investment in companies from different sectors as well as in real assets with the objective of generating, through professional management, a return adjusted to the risk assumed, with an increasing impact on the global economy and a clear focus on sustainability.

Within the Financial Sponsors universe, there are a number of different types of alternative asset investors, ranging from private equity investments in companies in various economic sectors (consumer, healthcare, industrial, etc.) to energy and infrastructure assets (digital and traditional), among other real assets.

Such investors do not necessarily take the legal form of an investment fund, as there is an appetite for this type of asset among the investment arms of insurers, sovereign wealth funds and pension funds and plans. Financial Sponsors are a key part of the Institutional Client ecosystem. 

Financial Sponsors play an essential role in global economic activity, as they contribute to making many projects a reality in capital-intensive sectors that are relevant to society, such as transport infrastructure, telecommunications or energy transition, among others, complementing the public investment. The main mission of these funds is to generate attractive returns for their investors through the identification and professional management of investment opportunities and, to this end, they require sectorial advice that accompanies them throughout the life of the investment, offering a very close and personalized service from fundraising and investment to the divestment of the assets in question.

In this regard, BBVA CIB is the ideal partner to accompany this type of client. The bank's knowledge of the different investment mandates of the Financial Sponsors, its capillarity in the business network and its experience in the different sectors in which they invest are key when it comes to identifying and financing the best investment opportunities, with the clear objective of contributing to the success of the investment mandate of the Financial Sponsor's management team. Likewise, the connection between different areas within the bank and its wide geographic presence contribute to the success of deals.

Since this sector is particularly linked to M&A activity and to the financing of M&A and the relevant underlying assets, the role of the financial advisor is absolutely key. This is how BBVA CIB's Global Head of Financial Sponsors, Gonzalo Fernández-Turégano, puts it: "At BBVA CIB we have extensive knowledge of both the global investment mandates of the Financial Sponsors and the various investment opportunities at the different countries in which we operate thanks to the breadth of our geographic footprint, as well as broad experience and sector knowledge. As an investment bank, we identify companies and assets in which Financial Sponsors can invest, we advise and finance them in the investment operation and accompany them throughout the life of holding these assets, through financing (both at the fund level and with structured finance at the underlying asset level), advice on debt optimization, transactional banking services and derivative financial products, among others. We also help them to sell those assets, working hand in hand with the management team to deliver the promised returns to their investors".

Integrating sustainability into the Financial Sponsors sector

Over the last few years, this sector has been consolidated with a great capacity to generate purchase operations and truly ample liquidity thanks to several macroeconomic factors. Financial Sponsors’ limited partners (many of them institutional investors) have been the first to impose strict ESG criteria in investment mandates, raising the sustainability component significantly from previous years, with a particular focus on funding the energy transition.

Many of these operations are particularly focused on key assets for society, such as social infrastructure and those necessary for digitalization and energy transition (including sustainable mobility and green energy). Gonzálo Fernández-Turégano places special emphasis on this last aspect: "Within the Financial Sponsors sector there is a very important sustainability component, as the investors we work with have integrated ESG criteria into their investment mandates, firmly committed to sustainability and energy transition. Therefore, there is a strong alignment between the investment activity of our Financial Sponsors clients and BBVA CIB's mandate as an investment bank with a clear commitment to sustainability. We want to help these strategic clients close their investments in sustainable assets by providing expert sustainability advice and financing for these assets".

The incorporation of sustainability within the investment mandates in the various sectors has marked a before and after in the strategy of the Financial Sponsors and, during this transition, BBVA CIB's sector specialization model accompanies them in their adaptation toward investment in assets that are in line with these sustainability objectives. This paradigm shift opens up a new need at the sectoral level, which require expert knowledge and a closer relationship with clients, what BBVA CIB’s teams are ready for.