Foreign direct investment doubled between 2014 and 2016 as assets in the Portuguese finance, insurance, science and technology sectors changed hands
Foreign investment in Portugal
has doubled in recent years resulting in an increase in
instructions for Lisbon lawyers from international private equity
firms. A surge of investment from foreign clients in sectors such
as banking, transport and telecommunications also means that
Portuguese law firms are benefitting from higher fees.
Data from UNCTAD (La Conferencia de las Naciones Unidas sobre
Comercio y Desarrollo) shows that foreign direct investment in
Portugal stood at €6.1 billion in 2016, up from €2.9
billion in 2014. Around three-quarters (72 per cent) of the 2016
total was invested in the finance and insurance sectors, with 15
per cent invested in science and technology-related
industries.
Privatisations and initiatives such as the Golden Visa scheme have
been key drivers of investment in the country. "Long-term
macroeconomic headwinds generated significant opportunities for
foreign investors, with reprivatisations in key sectors, notably
air transport, the postal service, waste water treatment and
telecommunications," says Diana Ribeiro Duarte, managing
associate at MLGTS. She adds that the financial sector has been a
key driver of growth in M&A work as banks divest non-core
assets due to the tougher regulatory environment.
In addition to opportunities in the finance and insurance sectors,
real estate has generated enormous interest among foreign
investors. "We see a lot of activity in relation to urban
regeneration, and the sale of business units to foreign nationals
entering the Portuguese market through the Golden Visa or
non-habitual resident schemes," says Duarte Garin, partner at
Uría Menéndez. Portugal is now firmly in the sights
of investors from a wide range of jurisdictions including Brazil,
the UK, the US and China. "We act on behalf of large private
equity firms – as well as family offices from Brazil and
other Latin American countries – who are looking for
opportunities in Europe," says Garin.
Middle class consumers
William Smithson, partner at SRS Advogados says: "The
burgeoning middle class in China is driving growth in sectors such
as food and beverages, and we see a lot of interest from family
offices, private banks and high-net-worth individuals." He
adds that such investors do not necessarily buy companies outright,
preferring instead to operate through local partners while
retaining a majority stake. Market observers agree that foreign
clients are generally used to paying higher fees for legal
services, but they also demand flexible billing practices, as well
as highly capable teams, and law firms are having to respond
accordingly, lawyers say. "Foreign direct investment brings
sophisticated and challenging clients, and selecting teams of
lawyers with deep knowledge of the client´s business is
crucial," says Ribeiro Duarte. She adds: "Risk sharing
and alternative fee arrangements such as payment schedules,
retainers and flat fees are ways in which law firms are addressing
the needs of foreign investors."
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