Santiago Principles Self-Assessment

Compañía Española de Financiación del Desarrollo

Fund Details Fund Website Search Assessments PDF version
  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

This self-assessment refers to the three Spanish SWFs managed by Compañía Española de Financiación del Desarrollo, COFIDES, S.A., S.M.E. (hereinafter “COFIDES”): Fund for Foreign Investments (Fondo para Inversiones en el Exterior, F.C.P.J. -hereinafter (“FIEX”), Fund for Foreign Investment Operations of Small and Medium Enterprises (Fondo para Inversiones en el Exterior, F.C.P.J. -hereinafter “FONPYME”) and Fund for the recapitalization of companies affected by Covid-19, F.C.P.J. (Fondo de recapitalización de empresas afectadas por la Covid-19, F.C.P.J – hereinafter “FONREC” (the three of them FIEX, FONPYME and FONREC hereinafter referred as the “Funds” or “SWF”):

The Funds were created and are regulated by statute of the following Spanish legal framework:

FIEX and FONPYME were created by article 114 Law 66/1997, of 30 December, Administrative Fiscal Measures and Social Order, and FONPYME by article 115 of said law (hereinafter “Law 66/1997”).

Law 66/1997 provides for the main features of the Funds. Additional and as development of such act, Funds’ activities and operation are in more detail regulated by the Spanish Royal Decree 1226/2006 of October 27 (hereinafter “Regulation 1226/2006”)

The owner of the Funds is the Spanish State, as the only contributor. Consequently, as Spanish State wholly-owned funds, for public law purposes Funds belong to the Spanish public sector. Specifically. Funds are assigned to the Secretary of State for Trade (“Secretaría de Estado de Comercio” -hereinafter “SEC”), which currently belongs to the Ministry of Industry, Trade and Tourism.

From a legal standpoint, Funds are stablished as fund without legal personality (“fondo carente de personalidad jurídica”), therefore not as a corporation, company or any sort of separate legal entity, but rather established as a separate pool of assets (“patrimonio separado”).

As per article 116 Law 66/1997, (i) governing body of each SWF corresponds to its respective Executive Committee (“Comité Ejecutivo”), whose composition and key features are provided by the Development Regulation; (ii) COFIDES is designated as Fund Manager for the Funds, acting for such purposes in its own name and on behalf of the Funds. 

See referred legal framework at (Spanish language only available):

https://www.boe.es/buscar/act.php?id=BOE-A-1997-28053 https://www.boe.es/buscar/act.php?lang=en&id=BOE-A-2006-19827&tn=&p=

FONREC was created by article 17 Spanish Royal Decree 5/2021, of 12 March, extraordinary measures to support corporate solvency in response to the Covid-19 pandemic (hereinafter “Regulation 5/2021”).

Regulation 5/2021 provides for the main features of the Fund. Additional and as development of such regulation, Fund’s activities and operation are in more detail regulated by the Resolution of June 15, 2021, of the Secretary of State for Trade, publishing the Agreement of the Council of Ministers of June 15, 2021 (“CM 15/6/2021”).

See referred legal framework at (Spanish language only available):

https://www.boe.es/buscar/act.php?id=BOE-A-2021-3946

https://www.boe.es/buscar/doc.php?id=BOE-A-2021-20880

The owner of the Funds is the Spanish State, as the only contributor. Consequently, as Spanish State wholly-owned funds, for public law purposes Funds belong to the Spanish public sector. Specifically. Funds are assigned to the Secretary of State for Trade (“Secretaría de Estado de Comercio” -hereinafter “SEC”), which currently belongs to the Ministry of Industry, Trade and Tourism.

From a legal standpoint, Funds are stablished as fund without legal personality (“fondo carente de personalidad jurídica”), therefore not as a corporation, company or any sort of separate legal entity, but rather established as a separate pool of assets (“patrimonio separado”).

As per article 116 Law 66/1997, (i) governing body of FIEX and FONPYME SWF corresponds to its respective Executive Committee (“Comité Ejecutivo”), whose composition and key features are provided by the Development Regulation; while Regulation 5/2021, (ii) governing body of FONREC SWF corresponds to Technical Investment Committee of the Fund, hereinafter referred to as the "Technical Investment Committee or TIC"; (iii) COFIDES is designated as Fund Manager for the Funds, acting for such purposes in its own name and on behalf of the Funds. 

COFIDES ownership is:

56.68% public held by ICEX (Spanish Institute for Foreign Trade), ICO (state-owned bank, attached to the Ministry of Economy) and ENISA (public institute to finance start up).

46.32% private capital held by Banco Santander, BBVA and Bank Sabadell.

1.14% held by CAF-Corporación Andina de Fomento (Development Latin-American Bank)

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

As generally described in section I.1 in fine, Funds are administrated by its respective EC/TIC and managed by COFIDES (“Manager”).

The division of roles and responsibilities are clearly stablished by the Regulation 1226/2006 (see sections 8 and 9) for FIEX and FONPYME. 

In general terms, the EC is responsible for the final decision on investments and disinvestments, the review of the portfolio, the approval of the Funds Annual Accounts and Report, and the oversight over Manager’s activity. EC meetings are held on a monthly basis.

For FONREC the division of roles and responsibilities are clearly stablished by the Regulation 5/2021 which says that a TIC is created as a collegiate inter-ministerial body attached to the Ministry of Industry, Commerce and Tourism, whose composition, operation and competences will be regulated by an Agreement of the Council of Ministers. The TIC will be the control and monitoring body of the operations carried out by the COFIDES.

The CM 15/6/2021 Annex IV describes the composition (section 2) and responsibilities (section 3) of TIC. 

Those are generally to approve investment, divestments, review of the portfolio and oversight of COFIDES activity. 

COFIDES, as the Funds’ Manager, is responsible for the day-to-day running of the portfolio, including inter alia the execution of investments/disinvestments approved by EC /Technical Investment Committee, monitoring of portfolio companies, accounting, depositary and other related administration tasks. 

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

The Funds investment policy is included in the Operational Guidelines.

For FIEX and FONPYME, the Operational Guideline is approved by the EC and was initially established in 2005. Since then, it was reviewed in 2011, 2015, 2017, 2019 and 2021.

The Operational Guidelines states that FIEX and FONPYME can invest in:

Viable private investment projects or commercial implementation abroad promoted by Spanish private companies.

Viable private investment projects abroad promoted by private companies from other countries, provided there is “Spanish interest”.

Viable projects of private investment abroad that the Spanish Trade Administration deems appropriate in response to reasons of general interest.

Support to Spanish companies for internationalization, which can be linked to the fulfillment of an internationalization objective. Such compliance may be verified through the systematic observation of an internationalization variable, such as maintaining a certain amount of international equity or obtaining a certain international EBITDA.

Investment in expansion capital funds that promote the internationalization of the company or the Spanish economy.

For FIEX and FONPYME the investment policy adjusts tight to the objective of the fund contemplated in the Law (66/1997):

Promote the internationalization of the activity of companies, and, in general, of the Spanish economy, through temporary and minority direct participations in the social capital of Spanish companies for their internationalization or of companies located abroad, and, in general, through participations in the own funds of the aforementioned companies and through any participatory instruments. Temporary and minority direct participations may also be taken in vehicles such as expansion capital funds that promote the internationalization of the company or the Spanish economy.

Risk matrix is included in the same Operational Guidelines (see section 22). 

For FONREC the Operational Guideline was approved by the TIC and was established in 2021.

The Operational Guidelines states that FONREC can invest in:

The purpose of this Fund is to strengthen and recover, in an agile and efficient manner, the solvency of medium-sized non-financial companies in any sector with a net turnover of between 15 and 400 million euros at the consolidated level and which, not having had viability problems prior to the Covid-19 crisis and being viable at

medium and long term, the effects of the pandemic on their balance sheets and markets are affecting them.

Strengthening solvency will also help to secure jobs, maintain and strengthen the productive net and promote the competitiveness of the Spanish economy.

The Fund will provide temporary public support under criteria of profitability, risk and sustainable development impact.

The Funds do not use any kind of leverage or speculative derivatives.

The Funds, through COFIDES, have never used external investment managers. External Due Diligence is requested following market standards.

A description of the Funds investment policy and how to apply to receive financial support is publicly disclosed in the COFIDES web page:

https://www.cofides.es/en/financing/internacionalization

https://www.cofides.es/en/node/5039