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Construction companies in Spain could break away from the slowdown of the Spanish property market by making themselves into low-cost energy stocks.
Companies such as, Sacyr Vallehermoso and their competitors have spent around $16 billion in total to buy shares in Spain's largest oil and natural gas producers. This turned out to be a great decision with companies, like Sacyr, doubling the assets on their balance sheet. Half of the Spanish building industry's revenue now comes from dividends. Company filings show that as oil and gas fees increase, those profits will also enlarge.
Robert Crimes, an analyst in London with JPMorgan Chase, says, "Some of these construction companies now have a diversified range of businesses and that's beginning to benefit them."
The company, Venture Finanzas directs about $200 million, has bought shares in the company, ACS, which has soared 12 percent since Sept. 30. This is more than the 7.8 percent increase of Spain's benchmark index, the IBEX 35.
The reason why these purchases took place was due to the “boom” in the property market and so constructers had accessibility to bank loans and cash, ensuring them to make purchases at a time when power and oil companies were looking for takeovers.
These construction companies have become much more than just building. They are the highest spenders in Europe to change their business. In the past 12 months; seven out of the 10 largest European acquisitions in the building industry are Spanish companies. ACS paid $2.7 billion in 2006 to raise its share in Iberdrola, the Spanish utility to 7.2 percent. It also possesses 40 percent of the natural gas company Unión Fenosa. Sacyr spent $8.6 billion gaining 20 percent of Repsol YPF, Spain's largest oil refiner.
