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Sep 09, 2019

Roadshow guide to Madrid

Spanish capital sees uptick in assets under management and new, value-focused boutiques

Amid the traditional non-deal roadshow locations of Europe – such as London, Edinburgh and Frankfurt – Madrid can be overlooked. 

Despite being one of the largest cities in Europe by population, the investment community in Spain’s capital is only modest in size and heavily focused on retail investors, leading many companies to give it a miss. 

With careful planning, however, a visit to Madrid can be worthwhile. ‘The Spanish asset management industry has seen good growth in the last five years, with total assets under management now around €300 bn ($330 bn),’ explains Adrian Rusling, founder of Phoenix Investor Relations, which has organized roadshows around Europe for more than 20 years.

‘Although there is institutional pension and insurance management as well as discretionary mandates, it’s essentially a retail market – roughly 75 percent of assets under management, compared with the European average of 25 percent. After the domestic equity market, the biggest focus, as you would expect, is on pan-European equities, although some institutions also invest directly in US equities.’

Who should companies look to meet? ‘The market has become much more dynamic, with a lot of new names emerging,’ says Rusling. ‘Of course there are still the old staples – the asset management subsidiaries of big banks like Santander and CaixaBank.’

Many of the new firms cropping up – such as Cobas Asset Management and Azvalor – follow the same creed: value investing. 

‘In the last five years, there has been a tremendous growth in the number of independent advisers,’ says Ricardo Jiménez, director of IR at Ferrovial, who lives in Madrid. ‘The most popular approach among these new firms is value investing. I would say this is the biggest change to the Madrid investment community over the last five years.’ 

Normally companies won’t need more than a day in Madrid, with a typical trip featuring a group breakfast or lunch, along with several one-on-one meetings. Visitors should be aware of the city’s fondness for traffic jams – the new president of the Community of Madrid recently referred to them as part of the city’s culture – so itineraries must be carefully thought out. 

Mapfre, the Spanish insurance company, can be particularly awkward to reach, with its headquarters 16 km north of central Madrid on a busy route.

In terms of cultural hurdles, Rusling says language can sometimes be an obstacle, especially in Q&A sessions. ‘Nevertheless, most investors speak pretty good English these days,’ he says. ‘Just be careful with jargon or acronyms.’ 

Another thing to remember is that mealtimes start later in Madrid than in most other European cities. Some visitors struggle ‘to adapt to the Spanish 2.00 pm lunches or 10.00 pm dinners,’ says Jiménez, ‘although the never-ending lunches with Spanish wine and a good cigar are already gone.’

If visiting IROs have any free time (unlikely as that is on a roadshow), the city’s various food markets offer a vibrant place to sample some local cooking. El Mercado Vallehermoso features several restaurants with excellent reviews, while in El Mercado San Fernando you’ll rub shoulders with plenty of locals. 

For those able to stay over the weekend, the surrounding area offers some great day-trip options. You could see the aqueduct at Segovia, or wander the medieval streets of Spain’s old capital, Toledo. 

While Madrid is not a must-visit for companies on roadshows around Europe, it is certainly worth considering, along with other investment hubs in the region, concludes Rusling. 

‘These are still secondary markets compared with the main European money centers, but can be very worthwhile if planned carefully,’ he says. ‘Madrid is the main market, although there are several interesting investors based in Barcelona also worth considering. And for the more adventurous, there’s also Andorra!