Ardian’s Fernandez-Albiñana: Spanish M&A slowing, but demand for strong assets remains

Ardian recently acquired Alicante-based telecoms services firm Aire Networks from Magnum Capital.

Gonzalo Fernandez-Albinana, Ardian Buyout Spain

The Spanish buyout market is “undoubtedly” slowing down, but there remain potential deals out there, with sectors like technology still attractive, according to Gonzalo Fernandez-Albiñana, head of Ardian Buyout Spain. Tech companies have been benefiting from efforts by the European Union to digitalize the economy, including a firm that Ardian recently bought.

The Spanish slowdown was attributable to a lack of demand for firms that no longer enjoyed such outside momentum, he said.

“M&A activity is composed of good assets that have people willing to invest in them,” said Fernandez-Albiñana. “Then there’s what I call turkeys – less attractive assets that had a lot of tail winds in the past and got sold. Those are receiving less interest now.”

Fernandez-Albiñana lists sectors like pharma, technology and software as having “very strong dynamics.” One recent deal he worked on was Ardian’s acquisition of Alicante-based telecoms services firm Aire Networks from Magnum Capital. The deal is subject to customary closing conditions, but PE Hub understands that the size of the purchase was around $618 million.

Aire is a telecoms firm but “not a traditional” one, said Fernandez-Albiñana. The company provides services such as cybersecurity offerings to other companies, but unlike many incumbent telecoms firms, they do not own any physical infrastructure and instead leverage that of other operators.

After growing with several acquisitions over the last few years, Fernandez-Albiñana sees further potential for Aire to expand, particularly given what he called its “unique” business model.

“People have become used to working remotely and having good quality networking streaming,” he said. “That is here to stay.” Aire’s clients need the firm’s services to then offer such streaming products to their customers, he added.

“On top of that, all the development funds granted by the European Commission, a big chunk of it, are in the digitalization of companies,” said Fernandez-Albiñana. “The large corporates were covered by the incumbents. That has now reached the SMEs. So now every small company wants their server in the cloud and wants it to be in connection with a network that can detect cyberattacks.” Aire was well placed to service these SMEs, he added.

Not lagging

On top of that, the move by consumers to online streaming of films and television has helped strengthen the data center part of Aire’s business.

“Now everybody watches movies on their iPad in the countryside,” said Fernandez-Albiñana. “For that to happen with quality, there needs to be a data center in the proximity. You’re not connecting to a data center in London because you would have a lot of delay. So proximity data centers are developing, and they need very good network connections.”

Aire is well placed to benefit from this ever greater reliance on telecoms systems because it a “one-stop shop” said Fernandez-Albiñana. “There are people doing fixed connectivity, others doing mobile, others doing cloud, others doing data centers. Aire have no network – they leverage other people’s networks. With all the explosion of fiber companies and network companies, there is a lot of investment in infrastructure. The vision is that they don’t need to invest in infrastructure, as there is a huge load of infrastructure to be used.”

Of course, in the fast-moving world of technology, being a one-stop shop requires constant expansion of services, whether organically or through purchases. That will form part of Aire’s growth plans, alongside a geographical push – another area where Fernandez-Albiñana sees Aire as a positive outlier.

He gave the examples of infrastructure operators, which cannot simply expand abroad, or companies focused on the business-to-consumer sector, which need to build a brand in each different country. Unlike those companies, he said, Aire’s services and expertise are easily exportable as the underlying network infrastructure, such as fiber, varies little from country to country.

The Aire acquisition came during a busy month in the tech sector for Ardian. At the end of June, the Paris-based firm agreed to buy a stake in SERMA Group, a French provider of consulting and specialist electronic technologies services across electronics, energy, cybersecurity and telecoms. Ardian was also on the other side of a deal just a few days earlier, selling its majority stake in Belgian IT managed services provider Trustteam.