This chapter presents the results of an original OECD survey of Spanish companies conducted for the purpose of this project, aimed at obtaining a better qualitative understanding of Spanish companies’ perception and use of capital markets, including barriers to access. The OECD Survey on Improving Access to Capital for Spanish Companies covers both listed and unlisted (delisted and privately held) companies of different size and profile. The survey results are complemented with firm- and transaction-level data from the OECD Capital Market Series dataset.
OECD Capital Market Review of Spain 2024
Capital Markets for a Vibrant and Sustainable Spanish Economy and Corporate Sector
Abstract
To complement the financial analysis and to provide a fuller picture of capital market functioning in Spain, the OECD conducted an extensive original survey of how Spanish companies use and perceive market-based financing. The OECD Survey on Improving Access to Capital for Spanish Companies (hereafter the “OECD survey”) covers listed and unlisted (delisted and privately held) companies to assess their understanding of market-based financing, including sustainable financing instruments, and their perceptions of barriers and opportunities to access capital markets. Answers were submitted by 257 companies, represented primarily by board members and key executives. This chapter summarises the survey results and complements them with firm- and transaction-level data from the OECD Capital Market Series dataset.
The survey, prepared by the OECD in collaboration with the CNMV and with the support of the BME, the Spanish Chamber of Commerce and the Círculo de empresarios, targets listed and privately held Spanish companies. It seeks to map their key characteristics, understanding of market-based financing and perception of barriers to access capital markets. The companies selected by the OECD were drawn from a universe of companies available in different commercial databases (ORBIS, FactSet and LSEG). Privately held companies were selected according to specific criteria: those that have never been listed were required to have a minimum of USD 50 million in assets, while delisted companies were included only if the delisting from the Spanish stock exchange had occurred in 2000 or later.
Corporate contact information (names, address and email addresses) was collected from ORBIS, FactSet, LSEG and Bloomberg. Publicly available information was used to complement, verify and correct the information obtained from the commercial databases. The contact persons within the company invited to respond the survey were either the CEO, CFO, Chair of the Board, board members or other key executives.
The online survey was sent to 1 989 companies (244 listed, 1615 unlisted and 130 delisted). In parallel, BME distributed the survey link to its database of listed companies as well as to 70 companies identified as being potential listers in growth markets. Furthermore, the Chamber of Commerce and Círculo de Empresarios also shared the survey link with companies affiliated with their associations. Physical copies of the questionnaire were also sent to 1 061 companies from the OECD list. By the end of January 2024, 257 Spanish companies had responded to the survey.
This section details the key characteristics of respondent companies, including size, industry distribution, financial performance, listing status and ownership structure.
The universe of companies answering the survey was classified into groups (small, medium and large) based on the number of employees and sales, using information contained in Orbis for 2022 (the latest financial year in the database). For sales, the classification is: below EUR 50 million (small); between EUR 50 and EUR 100 million (medium); and over EUR 100 million (large). Companies with sales of less than EUR 50 million account for 28% of the respondents, while medium and large companies account for 12% and 38% of respondents, respectively. No sales data are available on the remaining 22% (Figure 3.1, Panel A). For the number of employees, the classification is: below 100 (small); between 100 and 500 (medium); and over 500 (large). Using this metric, 40% of respondent companies are small, 21% medium-sized and 38% large (Figure 3.2, Panel B). The difference in respondents’ distribution among the three size groups may be partly due to the different availability of data.
Note: For the number of employees, the information obtained from Orbis was complemented with the value reported by companies.
Source: OECD Survey on Improving access to capital for Spanish companies, OECD-ORBIS Corporate Finance dataset, see Annex A for details.
With respect to the industry composition, 26% of the respondents belong to the services industry (Figure 3.2). The second most represented industry among respondents is manufacturing (20%), followed by finance and insurance firms (14%) and transportation, communications, electric, gas and sanitary services (13%).
Source: OECD-ORBIS Corporate Finance dataset, see Annex A for details.
Sixty-five percent of respondent companies are private held, 23% are listed on the Spanish main market and 10% are listed on a Spanish MTF. The sample also includes companies listed abroad (4%), that have delisted from a market abroad (2%) and that have delisted from the Spanish market (0.4%) (Figure 3.3).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
With respect to the ownership structure, 47% of respondents have the founder as the largest shareholder. The second most common largest shareholder category is a non-financial company (15%), followed by an individual who is not the founder (9%) and a family office (7%). In few companies, the largest shareholder is a bank, a pension fund or an insurance company (Figure 3.4, Panel A). In 80% of the cases, the largest shareholder is Spanish (Panel B).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
To understand the extent to which Spanish companies use market-based financial instruments, the survey asked about the perceived importance of a range of financing sources. Figure 3.5 illustrates the percentage of companies that reported each source as either “important” or “very important”. Internal funds was the financing source cited as important by most companies (84%). Bank loans and credit lines, both constituting options under bank financing, ranked second and third, identified as important by 71% and 65% of companies, respectively. External equity was considered important by 43% of the companies, of which half are publicly listed. In contrast, only 28% of companies identified debt securities as an important source, a lower share compared to other options such as trade credit (35%) or leasing (33%). The share of listed companies considering debt securities as an important source of funding (51%) was significantly higher than that of unlisted companies (16%).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Companies that identified bank financing (either bank loans, credit lines or overdraft) as a relevant financing source were also asked the reasons behind this preference. A long-term relationship with banks and the knowledge of the business by banks were the two main reasons stated by respondent companies. The lower cost of loans compared to other financing sources ranked third in terms of importance. Moreover, 15% of the companies responded that they had no other option available.
Companies were also asked the number of banks they had a relationship with. Forty-five percent of companies reported having a relationship with 1 to 5 banks; 31% with between 6 and 10 banks, and 16% with more than 10 banks. Thirty-two out of the 39 companies engaging with more than ten banks are classified as large based on sales.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
The survey also aims to provide insights into the investment outlook of companies and the sources of financing that most influence this outlook.
More than half of the survey respondents stated that they were planning to increase their investment in the next three years compared to the last three years. However, the percentage of companies with such plans varies, notably depending on listing status. Specifically, while 58% of the listed companies expected to increase their investments, the respective figure for unlisted firms is 43%. Twenty-nine percent of the listed firms and 32% of the unlisted firms were planning to keep investment constant. Notably, 13% of unlisted companies did not plan to make any investments in the next three years. This percentage decreases to 5% in the case of listed firms (Figure 3.7, Panel A).
Internal funds was identified as the financing source that has the largest positive impact on investment plans, thereby confirming the preference among Spanish companies to rely on internally generated funds over external financing sources. Interestingly, approximately 55% of the firms indicated that the availability of external debt, external equity or financing provided by a parent company has no impact on their future investment plans (Panel B).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
The importance of the different financing sources as well as their impact on anticipated future investment differ among companies depending on their investment prospects. For example, 31% of the companies that were planning to increase investment in the next three years considered external equity an important source and 47% of them stated that its availability positively impacts their future investments (Figure 3.8, Panel A).
Note: “More”, “same” and “less” investment are based on companies’ stated investment plans for the next three years. Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Conversely, for companies intending to decrease their investment levels, only 7% considered external equity important, and 19% believed it positively affects their future investment (Panel C). Moreover, the availability of internal funds has a positive impact for 85% of companies planning to lower investment. This figure decreases to around 75% for the companies that were planning to either maintain or increase their investment.
To better understand the factors that drive a company to become publicly listed, as well as the extent to which they make use of capital markets following an IPO, a set of questions were targeted solely at listed companies.
Being listed on the market is not a one-time choice for companies, but rather a continuous one. It is therefore important not only to understand why a company decides to list in the first place, but also what pushes it to continue being listed. The higher prestige and credibility usually associated with publicly listed companies was the reason most companies (95%) highlighted as being important in their decisions to continuing being listed. Other factors recognised as important by many respondents were the increase in public awareness of the company (91%), the interest coming from institutional investors (86%) and the diversification of financing sources (85%) (Figure 3.9). Among the other reasons that companies provided, regulatory issues were also mentioned as important. For example, in the case of real estate investment trusts (REITs) regulations require the investment trust to be listed.
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Companies listed in the Spanish market were also asked about the main challenges they encountered while being listed. The issue identified by most companies (59%) was the low level of market liquidity, followed by the compliance costs incurred to meet regulatory and corporate governance requirements (53%), share price volatility (45%) and the requirements for transparency and disclosure of information (44%). On the other hand, few companies reported high market fragmentation, low investor participation and high stock exchange fees as main challenges (Figure 3.10).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Once companies decide to go public, an important decision is where to list their shares. To investigate the factors impacting that decision, the survey asked companies listed in the Spanish market to indicate the reasons that drove them to select the domestic, as opposed to a foreign, market. Although most companies experienced several challenges with being listed, the good functioning of the Spanish stock market was reported as an important driver by 77% of companies (Figure 3.11). The second most frequently mentioned important factor was the better knowledge of the regulation (70%), closely followed by the fulfilment of investors’ expectations. Forty-three percent of respondents stated that the Spanish market was the only option. Among other reasons, companies reported the historical linkage (i.e. the fact that the company is Spanish) as being important.
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Listed companies can raise new capital through secondary public offerings (SPOs). The survey investigates the extent to which companies have used this instrument in the past and whether they intend to employ it in the future. The number of times respondent companies have issued capital through SPOs after their IPO is remarkably limited. Surprisingly, this holds true even for companies that have been listed in the stock market for a long period of time. In fact, most companies reported either one or two SPOs, with the exception of three respondents that issued new capital through eleven, four and three SPOs (Figure 3.12).
Note: The time a company has been listed was calculated as of February 2024.
Source: OECD-ORBIS Corporate Finance dataset, OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Only 31% of the respondent companies reported that they were planning to issue new capital in the short or medium term. Among the companies intending to do so, in 90% of cases financing new growth opportunities was the main reason (Figure 3.13). In contrast, the main reasons indicated by companies not planning to issue new capital were the availability of better financing options (36%), the dilution of control that issuing new capital entails (34%) and a lack of financing needs (34%). While the reasons not to issue new capital vary across companies, the factor driving companies to issue new capital was mainly to finance growth opportunities, with other factors playing a relatively smaller role.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
The survey also examines the ambition of firms listed on a Spanish MTF to move to a regulated market within the next three years. Seventy-eight percent of the respondent companies expressed no will to do so, stating in 79% of the cases that the MTF meets their current needs. Three companies reported the high costs of listing on the regulated market as a deterrent to move. Among the 22% companies that were considering moving to the regulated market, all respondents indicated the growth of the company, access to a wider pool of investors, improved access to finance and greater analyst coverage and market research as reasons to do so. In addition, 75% also mentioned the greater liquidity in the regulated market as a factor influencing their decision (Figure 3.14).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Unlisted companies were selected to answer the survey based on their asset value, specifically targeting those with the potential of listing on the stock market. The survey aims to understand whether these companies were considering going public in the near future as well as the reasons behind their decision. Companies that were previously listed but decided to delist were asked about their reasons for doing so. Out of the five delisted respondent companies, two mentioned delisting after a merger or acquisition, two stated that their presence in the market was very small, and the remaining one pointed out that the costs were too high.
Among privately held companies, only 6% stated that they were planning to go public in the next three years. Financing new growth opportunities, having better access to capital market financing and providing an exit opportunity for original shareholders were mentioned by over 50% of the companies as the main factors playing a role in the decision (Figure 3.15).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
In contrast, 94% of the privately held companies surveyed had no plans to list on a stock exchange within the next three years. The most important reason, which was selected by 58% of companies, was shareholders' unwillingness to share control with others. The second most significant factor, cited by 53% of companies, was the perceived insufficient size of their business for a stock exchange listing, followed by having better financing options available (41%) and no need for external financing (41%). Other factors, considered important by over 30% of companies, include complex regulations, compliance costs to meet regulatory and corporate governance standards, lack of demand from investors, the fact that is a time-consuming process and uncertainty about the success of the IPO process due to market volatility and the price discount usually demanded (Figure 3.16).
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Unlisted companies were also asked whether, in the last three years, any market actor approached them to encourage the company to go public or to provide information regarding the costs and benefits of becoming publicly listed. Nearly 80% of respondents indicated that they had not been approached by any market actor in this regard. Among the rest, 22 companies had been approached by investment banks and 11 by potential investors (Figure 3.17).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
The survey also asked companies about factors that they believe contribute, or would contribute, to the success of the public listing environment in Spain. Additionally, given the regulatory changes to support deeper capital markets that have taken place in recent years, companies were also asked about perceived improvements over the last three years.
Both listed and unlisted companies mentioned liquidity and regulatory structures as important. Nearly 90% of listed companies identified better support for market liquidity and simplified disclosure and compliance requirements as the most important factors for a more successful listing environment. Increased institutional investor participation as well as tax incentives for these investors were also highlighted as very significant factors (Figure 3.18, Panel A). For unlisted companies, a well-established regulatory and supervisory framework for alternative segments of the stock market (i.e. growth markets) was identified as the most crucial condition, cited by over 80% of companies. Tax incentives for investors and better support for market liquidity ranked second and third, respectively, in terms of relevance (Figure 3.18, Panel B). Notably, the existence of multiple-voting shares (MVR shares) was not considered important by more than half of the companies, both listed and unlisted.
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Among the respondent companies, 32% reported perceived improvements in the stock exchange in the last three years. Increased investor protection was the most frequently mentioned improvement, followed by simplified disclosure and compliance requirements. On the other hand, few companies indicated an increase in market liquidity or control-enhancing mechanisms as areas that had improved (Figure 3.19).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Debt securities, primarily consisting of corporate bonds, commercial papers and notes, were identified as an important source of financing by less than 30% of the companies surveyed (Figure 3.5). The survey included questions on the past and future issuance of debt securities as well as credit ratings to gain a deeper understanding of Spanish companies’ perceptions of debt instruments. Furthermore, to understand the reasons behind the limited use of debt securities, companies were also asked about the factors influencing their decision to (not) issue such securities.
Only 26% of the companies reported ever having issued debt securities. Among these, 40% have done so on a multilateral trading facility in Spain, while another 40% reported issuing debt securities abroad. Luxembourg is the most frequently mentioned foreign market for Spanish companies to issue debt securities, followed by Ireland. Only 26% of companies issued debt on a regulated market in Spain. However, this percentage is still higher than those opting for private debt issuance (Figure 3.20).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
The share of respondent companies with a valid credit rating is comparable to those that reported having issued debt in the past. Specifically, out of the surveyed companies, 25% indicated that they had a valid credit rating. Notably, the majority of these companies (62%) hold a credit rating from a multinational credit rating agency (e.g. Moody's, S&P or Fitch), while the remaining 38% reported having a credit rating issued by a national credit agency (Figure 3.21).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
With respect to prospects, the percentage of companies that plan to issue debt securities in the next three years stands at 24%, similar to the share of companies that have issued debt securities in the past. To gain further insights on this, the survey asked companies to elaborate on their decision. More than 95% of the companies that plan to issue debt securities in the next three years consider better access to other capital market financing and being able to diversify the company’s financing sources as important reasons supporting their decision. Additionally, factors such as longer debt maturities, lower cost of debt, the possibility to raise capital for financing growth opportunities, and better visibility and prestige are also considered important by more than 80% of the companies. Better external monitoring was the least commonly mentioned factor but was still identified as important by more than half of respondents (Figure 3.22).
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
The most frequently mentioned reason for companies not to issue debt was a preference for bank financing, which 63% of companies reported as an important factor. In addition, high costs and no need for external financing were stated as important reasons by 53% of companies, respectively. The majority of companies did not consider being exposed to public scrutiny, low market liquidity, regulatory supervision and fees, requirements for transparency and disclosure of information as well as the lack of experience with capital-market based financing to be important factors (Figure 3.23).
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
To better understand the financing resources employed by Spanish companies, the survey also included questions on the use of private equity (PE), venture capital (VC) and private credit, as well as the perception that companies have of these types of financing.
In total, 38% of respondents reported that either a private equity or venture capital firm had approached them in the last three years with an interest in investing in the company (Figure 3.24).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Among the firms that have, at any point in time, been approached by a venture capital or private equity firm, 41% have accepted an offer of investment. Of these, only 27% cited that the decision to receive funding was made because of the expertise these investors would bring to help grow the company (Figure 3.25). Among companies that have been approached but rejected the offer, the main reason cited was the unwillingness to lose control of the firm which was selected by 79% of companies. This is in line with the reasons cited for not seeking a public listing (Figure 3.16).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Most respondent companies did not differentiate between private financing sources, such as PE, VC or private loans, and public equity market or traditional loan funding when it comes to the ease of price negotiation, simplicity, privacy and the investors’ knowledge of the business environment. However, private financing sources were perceived as more risk-willing and offering greater speed and flexibility. In contrast, PE or VC funding were associated with a worse cost of capital compared to public market funding (Figure 3.26, Panel A). Similarly, private loans and traditional debt financing, such as corporate bonds and bank loans, were considered similar in most aspects, except for the level of flexibility and the cost. Private loans were considered worse in terms of cost, but as offering more flexibility (Panel B).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Finally, the survey includes questions on Spanish companies’ ESG targets and practices as well as the use of sustainable financial instruments. Seventy percent of respondent companies reported having set an ESG target, with environmental targets being by far the most common (69%), followed by social (30%) and governance (17%) targets.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
With respect to disclosure practices, 57% of companies reported disclosing information on climate and other ESG-related practices. The majority (57%) use domestic standards, 40% follow an international standard and the remaining 18% developed company-specific standards. The international frameworks reported by Spanish companies include the EU taxonomy, the General Reporting Initiative (GRI) standards, the UN Agenda 2030 and the BREEAM (Building Research Establishment Environmental Assessment Method).
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Forty-three per cent of the companies surveyed also reported having used or planning to use sustainable financial instruments. Among those, the most common instrument, cited by 43% of respondents, was green loans. Sustainability-linked loans and green bonds ranked second and third, cited by 33% and 28% of companies, respectively. Social bonds were the least commonly cited instrument.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
Among companies that have either used or are planning to use sustainable financial instruments, 95% cited improving the company’s reputation as a reason. Fulfilling customers and other stakeholders’ expectations was also cited by 91% of companies. More than 60% agreed that communicating the ESG strategy, lowering the cost of capital and attracting more institutional investors were important reasons for using sustainable financial instruments.
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.
When it comes to reasons for not using sustainable financial instruments, insufficient availability of information ranks first, cited by 44% of the companies. This was followed by the high cost (38%), a lack of appropriate available instruments (37%), no reduction in the cost of financing (35%) and insufficient supporting market infrastructure (35%). The lack of clear rules and regulatory frameworks, as well as being unaware of the existence of sustainable financial instruments were not stated as important factors by most companies.
Note: “Important” represents the percentage of companies that selected the reason as being either “important” or “very important”. Not important is the percentage of companies that indicated the variable as being “not important”. “No response” represents the percentage of companies that did not provide a response for the given variable.
Source: OECD Survey on Improving access to capital for Spanish companies, see Annex A for details.