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Private sector: The private side of Portugal

The extent of government involvement in Portugal’s economy might be partly to blame for anaemic growth over the past decade, but it’s throwing up attractive opportunities for private-sector investors. Simon Brady reports.

WHEN MAGNUM INDUSTRIAL Partners closed its fundraising efforts in November 2007, the private equity firm had secured an impressive €866 million in commitments. The roster of backers reads like a Who’s who of banks, institutional investors and family offices, including those of Portugal’s richest man, cork-to-petrol billionaire Américo Amorim. That war chest made the Portuguese private equity firm by far the largest of its kind in Iberia – long-established Mercapital is second – and was seemingly a vote of confidence not just in Magnum’s partners, lead by Ángel Corcóstegui, former chief executive of the then Banco Santander Central Hispano, but also in the prospects for profits in Portugal – and Spain.

"Of course it may seem strange that we decided to create this fund at a time when many people were expecting an economic slowdown in Spain and when growth in Portugal has been almost non-existent, and at a time when the availability of leverage, which many people see as vital to the success of private equity, has been dramatically reduced," says João Coelho Borges, partner at Magnum. "But from the beginning we never had a strategy of using extreme leverage to generate returns and the crisis has actually created many opportunities."