If lightning and lightning are the prelude to thunder, the large investment bank brokers are the sign that a large client is becoming a shareholder in a listed company. It has happened up to three times already in Indra with the share movements that have been reported in 2022 and 2023 in the records of the National Securities Market Commission (CNMV).
If Deutsche Bank preceded the Aperribay family (SAPA Plasencia), Goldman Sachs did so with the purchases of shares of the ‘hedge fund’ of the president of Prisa and Amber Capital, Joseph Oughourlian. Now JP Morgan has become Indra’s largest indirect shareholder behind SEPI (Government) with more than 10% of the capital, according to the CNMV registry. The problem is that it’s not real.
The broker of the largest bank on Wall Street is declaring a position that is not its own, but that mostly belongs to the Escribano brothers, who have increased their participation in Indra from 3% to 8% of the capital. The rest is from other clients such as hedge funds that operate short on the stock. A part of that 10% is in securities lending mode for these investors. The rest is the declaration of a financial derivative structure maturing in 2026 for this client.
Only the two stock market operations double the value of the Escribano company itself or its income perimeter from last year. The 175 million invested in Indra is equivalent to 13 times its annual net profit in 2022.
Specifically, the indirect 8% that JP Morgan claims to own are actually purchase options with physical delivery on 14.1 million shares. How does this work? What are we talking about? It is a bilateral contract between the two parties that is registered OTC (over the counter) without going through a transparently organized market and with a central settlement.
‘Essentially settled call’ options, as published in the CNMV) are those that imply the actual delivery of the underlying, that is, Indra securities. The owner of call options (JP Morgan) would buy those shares, while the owner of essentially liquidated puts (Escribano) would sell that percentage of Indra that he currently holds.
A defense startup with JP Morgan
What then is the reason for this sophisticated operation? This type of structure responds to the client’s need to ensure investment support since JP Morgan itself finances Escribano’s acquisition of an additional 5% of Indra, as published by ‘Economía Digital’. The amount is not lower since it would require putting 110 million euros on the table ‘by the clock’, but in this way the capital put up by the buyer is much lower. In addition, JP Morgan can recover that 8% of the capital as a kind of insurance if the client decides or should sell.
Escribano is not a large company despite its rapid growth in recent years, which is why the purchase of an additional 5% of Indra without external support seems unthinkable. The importation of the investment now represents the same equivalent to its entire annual turnover. However, the government’s plan to cement a new hard core of shareholders around Indra has allowed them to have that support, and to hire one of the most important investment banks in the US.
The CEO of Escribano Mechanical & Engineering, Angel Escribano, confessed in 2019 in ‘La Información that just a decade ago they were a small company that changed its business model and began to manufacture its own technology, instead of buying machines from other companies. . It closed 2018 with annual sales of 50 million euros and in 2022 with 91 million.
In 2016, the sovereign fund of Oman bought 32% of the former Mecanizados Escribano through the company Bucotelar SL. In 2022, the Escribano family repurchased that stake for 34 million euros, that is, with a 100% valuation of their own company valued at 106 million euros.
In March 2023, Escribano bought the first 3% of Indra with an associated investment of 65.7 million euros and in November it acquired another 5% with JP Morgan with an associated investment of 110 million. Only the two stock market operations double the value of the Escribano company itself or its income perimeter from last year.
The 175 million invested in Indra is equivalent to 13 times its annual net profit in 2022. Of course, those responsible for Escribano assure in a management report that the company is taking off with “strong growth both nationally and internationally” and they foresee achieve a turnover of 200 million euros in the “coming years” and a staff of 1,000 people compared to the current 680.
A hard core with 50% of Indra
According to the company itself, its entry into Indra occurs “as an important step to be able to debate and participate in decisions that could directly or indirectly affect the development of Escribano E&M’s activity”, due to the influence that Indra has on the entire Defense sector in Spain, since practically all contracts are with states. Escribano claims to have “an investment plan that will allow you to increase your participation until you can have the appropriate scenario for the development of your strategy.”
There are no public details of the scope of that plan, but Indra’s shareholder registry points to big changes after two frenetic years in which SAPA (Aperribay) took over 5% of the capital, Amber Capital with just over 6%. , Escribano with another 8% and the State, through SEPI, boosted its participation in the company chaired by Marc Murtra to 28% of the capital. In total, the shareholder group borders on the border of absolute majority with the level of 50% of the capital.
THE NAIS IS OFFICIAL EDITOR ON NAIS NEWS