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Interview Marta Martinez Queimadelos

28 June 2018

Interview Marta Martinez Queimadelos, CEO of Grupo T-Solar at Mergermarket’s Spanish M&A and Private Equity Forum 2018 highlighting the best tips for doing M&A deals in the Spanish Energy Market and the impact that recent regulations changes have on M&A transactions.

MERGERMARKET: Marta, could you tell us something about the top tips for doing M&A in the energy market in Spain?

MARTA: Yes, sure but before answering the question let me introduce our company which is T-Solar to get around the context where we do this kind of M&A transactions. T-Solar is a small company, we are only 22 of us with a huge experience in the energy sector and in M&A transactions and we have almost 400 megawatts of installed capacity with presence in 6 countries. So with this context and thinking about the main pillars of M&A which are the target, the negotiation process, the due diligence and the integration, my main tips could be that first of all you have to select carefully your target, taking into account your internal requirements of size, technology, geography or whatever and also without leaving sight the type of process that you are going to deal that could be a lateral process or a competitive one and also having in mind what are the type of stakeholders you are going to negotiate with, because it is not the same to deal with private owners, private equity funds, big companies or a small platform. In our case we closed recently a transaction let me say” big” of 100 megawatts of CSP technology where the main challenge was the technology itself because T-Solar is focused on solar photovoltaic, so this thermosolar technology was new for us and, we recently closed two small integrations of photovoltaic assets too, where the specific challenge was more related to the type of problems that these small assets have related to the technical or financial side than to the technology. So, if you choose this target properly, you could have a higher rate of success and you can lower the time and the cost that you will spend on this process.

Moving on the negotiation process side, the main tip is to be upfront, reliable and honest because these processes are complex. They normally mean a huge amount of time consuming so building a reliable and trustable relationships with the seller from the beginning for me is indispensable. Deal makers should build a bridge to get what is in your counter parts head and be prepared for all the meetings that you are going to have, trying to face the different situations that you are going to manage, having answers for all of them and being prepared in advance.

In the due diligence and talking about a platform like T-Solar, for us it is quite important to combine efficiently the resources that we have internally, the availability of our team with the external advisors. So, for example in the CSP transaction, as the main challenge was the technology, the technical advisor was the key to be sure that we found all the key points of risk to mitigate them and the key points of value creation to be sure that we get it.

Finally, in the integration process for me it is vital to have 100-day plan prepared from the very beginning to be sure that you are going to get all the value creations, synergies that you plan to have, not leaving any key people in the process and minimizing the risk as you can lose a lot of money in this process. In our case it is not the same to integrate a company with big headcount involved or with complex IT systems rather than integrate an asset but in both cases, you must take care of the integration process so this are the key point for me.

MERGERMARKET: And for your company or maybe for the sector how do the regulatory changes in Spain could have affected your M&A strategy? Did you have some problems with the regulatory changes few years ago or maybe not?

MARTA: The regulatory framework in Spain is quite complex so focusing on the upcoming regulatory changes, we have in the short term the uncertainty in the regulatory rate of return change and in the M&A this is a risk that is on the table from the very beginning and the seller and the buyer must make efforts to share the upsides and the risks. The way we sometimes solve this problem is negotiating an earn out clause, trying to maximize the seller benefit and minimizing our risk as a buyer. This is the only thing we can do managing this uncertainty in the short-term period. In the medium term, you have the energy transaction law, that for us means a lot of opportunities because of all these laws have as main driver, the penetration of the renewables in the mix of the energy generation in a country. So, the investments for the future will be focused on the renewable sector and also on the sectors that mean the electrification of the demand, like electric cars, smart grids, rebuilding’s with energy efficiency etc. This are the main challenges for the future.

MERGERMARKET: It would be a good opportunity to grow? To invest in Spain?

MARTA: Yes, for us sure. We are in the right sector at the right time.



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