On 1st February, ESADE Alumni hosted a Venture Capital Forum session entitled “Restructuring: Opportunities in Times of Crisis" at ESADE Madrid. At the session, representatives of PHI Industrial Acquisitions and Sherpa Capital expressed optimism regarding the sector’s prospects for 2012. The event was moderated by Luisa Alemany, Director of the ESADE Entrepreneurship Institute and Associate Professor in the Department of Financial Management and Control at ESADE.
Experts in this type of investment work in a market specialised in finding opportunities where others only see hopeless cases. Restructuring funds differ from other venture capital operations in that they invest in companies that have are going through tough times. Unlike traditional private equity, companies like PHI Industrial Acquisitions and Sherpa Capital try to return companies to profitability by making changes in their management and managers. Eduardo Navarro, founder and CEO of Sherpa Capital, characterised the activity as “financial plus operational restructuring".
The comparison between enterprise value and sales in Spain in 2011 shows that the restructuring fund market has yet to completely mature in this country. According to Jordi Bricio, managing partner of PHI Industrial Acquisitions, “the most receptive companies are large groups with subsidiaries in Spain, because they’ve often seen it somehow in other countries". Mr. Bricio predicted that in 2012 restructuring funds would be “a sort of opportunity that will need to be tapped, because bankruptcy law is going in that direction".
Dominique Barthel, Director General of the Spanish Venture Capital Association (ASCRI), wrapped up the session by presenting an analysis of the association’s venture capital activity in 2011. She expressed hope that investment would pick up once again in the summer.
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