In an ever-changing business world, regulations, from competition compliance, to tax measures and banking rules, are also changing from month to month. To keep up and stay tight in business, every company needs the expert opinion of an experienced and well up to date lawyer.
In Madrid, that lawyer is Hermenegildo Altozano, Partner at Bird & Bird, an international commercial law firm. Here Hermenegildo discusses his work in Spain and Latin America, his involvement in the energy industry, and the prospects of M&A throughout the coming months.
Hermenegildo Altozano is a partner in the international law firm of Bird & Bird. He heads the Energy & Infrastructure practise in Spain.
He specialises in Energy, advising on transactions and projects in Spain and Latin America, and provides investment protection and arbitration advice in relation to Latin America. Hermenegildo advises Spanish and international companies on energy projects in Spain as well as in other countries. He has deep industry experience and understanding of not only the legal but also the commercial issues that challenge his clients’ business objectives.
He is the director of the Senior Programme in Energy Law at the Instituto de Empresa (Madrid), co-director of Energy and Regulation Forum at FIDE association and professor of Private International Law at Universidad Francisco de Vitoria (Madrid). He is a regular participant in Intereconomía Business' television programme.
Bird & Bird is an international law firm, with a rare and invaluable grasp of strategic commercial issues. We combine exceptional legal expertise with deep industry knowledge and refreshingly creative thinking, to help clients achieve their commercial goals. We have over 1100 lawyers in 28 offices across Europe, the Middle East and Asia, as well as close ties with firms in other parts of the world.
Can you provide some detail about the corporate tax systems that attract businesses to Spain and Latin America?
Spain has an attractive tax system by means of the ‘Entitidades de Tenencia de Valores Extranjeros’ (ETVE), which operate as Spanish holding companies and benefits from an extensive network of double tax treaties. In addition they profit from the bilateral investment treaties that Spain has entered into with a significant number of jurisdictions.
Which jurisdiction do you prefer working in and why?
Each jurisdiction has its areas of interest. I very much enjoy working in Cuba, given the challenges involved. The process of apparent "normalisation" with the US has still left plenty of questions, and US extraterritorial legislation is an element that needs to be taken into account to define investment strategies in Cuba. On top of that, Cubans are tough negotiators and this also represents a challenge. Deals in Cuba require patience, persistence and imaginative legal solutions to accommodate the requirements arising from a centralised and planned economy on the one hand, and the legitimate interests of foreign investors on the other.
You are heavily involved in the Energy industry; what are some of the common challenges that face Energy companies in both Spain and Latin American countries? How do you tailor your approach to assist them in navigating such challenges effectively?
One of the main challenges is represented by regulatory changes. In Spain, the learning has been somehow painful given the financial implications in the operators following the reduction of the remuneration initially committed by the Kingdom of Spain vis-à-vis the investors, but has shown a way to structure investments in the renewables industry, so to minimise the potential impact of regulatory changes, particularly by entering into power purchase agreements or other mechanisms, evidencing that there is a specific commitment vis-à-vis the relevant investor.
You are involved in mergers and acquisitions within the Energy industry; how healthy is the M&A sector in this area in Spain currently?
Following the main regulatory changes in the electricity and oil industries, the Spanish Energy sector is facing an increasing appetite by foreign investors (mainly investment funds) which are driven by the perception of stability represented by the new regulatory frame and the general consensus that the main issue represented by the tariff deficit is in its way of solution.
How do you see it progressing through the rest of 2016? Why?
The increase in M&A activity will largely depend on whether a new government will finally be formed, or whether Spain will go for new general elections. The political uncertainty is contributing to a slow down for deal flow (although this deal flow continues), given that certain strategic investments require at least an informal ‘nihil obstat’ from the Government.
