Private Equity and uncertainty: the Catalan independence movement in Spain

Share on facebook
Share on twitter
Share on linkedin

The political tug of war between Catalan secessionists and Spain’s central government at the end of 2017 fostered a significant degree of uncertainty for investors and consumers alike. Analysts anticipated that PE houses would exercise caution and consumers would likely reduce their spend in light of the short-term risk engendered by the political crisis.

Data indicated, however, that in the quarter that was characterised by protest and unrest, PE houses operating in the Spanish market remained largely bullish in their investment decisions. In fact, Spain’s private equity market posted a record-breaking performance in 2017 with over €3.9 billion in investment. International investment accounted for 75% of this performance indicating that international investors also did not heed analysts’ warnings. One might argue that this international activity is primarily a consequence of the traditional lack of investment in midcap deals by Spanish PE houses, who have long been polarised at either end of the PE investment landscape. Whatever the reason, investment is still attractive and this positive performance is expected to continue throughout 2018 with Roland Berger’s survey of 2500 PE GPs and analysts indicating that Spain is one of three core European territories expected to drive PE M&A growth in the region.

Consumers, on the other hand, were more bearish in their spending, with Bloomberg data indicating that household spending cooled by 0.1% from 0.7% to 0.6% in the last quarter of 2017.

Analysts have thus far painted an aggregated picture of market performance. However, this begs the question: does an analysis of different consumer industries in the Spanish market point to the same positive performance? Using onefourzero’s data as a proxy for consumer market demand, we were able to assess the performance of segments that are the main drivers of spend in the Catalan region, namely consumer retail and travel.

Catalonia: Travel

With 11% of GDP, tourism is one of the primary drivers of consumer spend and employment in the Spanish market. This particularly the case for the Catalonian region which sees over 18 million tourists every year. Figure 1 illustrates that consumer demand for travel to Catalonia registered a moderate performance with a 1% increase over the last year. A comparison of the first quarter of 2018 and the same period last year further illustrated that consumer demand for travel within this region also increased 1.8%.


spain catalonia travel

Spain: Consumer Retail

Retail is another core aspect of consumer spending in the Catalonian region. According to economic think-tank Oxford Economics, consumer consumption accounts for over half of total output in the Spanish market. Digital demand for this category declined by 2.8% year-on-year, as evidenced by figure 2. A comparison of February 2018 to April 2018 versus the same period last year also evidenced a 2.53% decline. This data is in line with Bloomberg’s findings, who also cited declines in consumer spending.


spain retail

With minimal prospects of succession in the near future, the Spanish investment market and consumer demand for products and services are expected to remain moderately stable. The potential succession of Catalonia from Spain in the future, however, should still hold the interest of investors going forward. Not least because it has profound implications on the potential performance of assets and return on investment due to the legal uncertainty and consumer frugality that usually occurs in times of crisis. Using digital data as a means of understanding market potential and consumer demand is one such way of gaining measurable insights into the implications of the future succession efforts.

To find out how you can use digital data to test the impact of world events on investment and consumer behaviour, capture measurable insights and inform investment strategy, please click here or email