1. Laura, can you tell us about Santander and growth initiatives in the US?
In the US we are focused on leveraging the global strength of our retail and commercial platform against a targeted US client base, including the TMT industry vertical. Santander is one of the top ten banks in many of the markets in which it operates and one of the largest banks in Europe by market cap. We have an unparalleled franchise in Latin America where we are the #1 bank in many countries. In the US, we are aligning origination activities with our global telecom and technology focus to provide multi-faceted solutions both domestically and internationally. It’s a powerful combination and brings some unique capabilities to companies in the TMT sector.
Like many European institutions, Santander is looking to the US for growth and putting significant resources behind the geography. We are aiming to triple our US contribution to the group within the next five years. Given our global capabilities and expertise, we are expanding our client base and up-tiering aggressively with current relationships.
2. Can you tell us about Santander TMT’s current focus?
We support TMT companies across a range of industries - communications infrastructure is a focus for us given the attractive supply/demand trends, recurring nature of cash flows and general credit strengths. We also spend a lot of time in cybersecurity and fintech as well as with SaaS-oriented businesses including UCaaS and CPaaS models. We are a growing capital provider to the TMT sector, with both major public companies and privately held entities. Our Structured Finance team is especially strong and has led numerous financings for communications infrastructure projects to leading industry sponsors. Santander developed an outstanding platform to support growth for data center and fiber networks companies by providing creative and diversified financing structures across the US, Latam and Europe; we were awarded the “Most innovative investment bank of the year for structured finance” in 2019 by The Banker.
With my background in structured finance and our platform’s extensive capabilities, we’ve been advising clients on optimal capital structure, through near-term maturity management, investor base alignment, and have leveraged our ratings advisory team to help companies anticipate ratings perspectives ahead of strategic initiatives, for example.
Lastly, we leverage Santander’s Financial Sponsors coverage team which consists of 34 senior banking professionals spread across the global Santander footprint. The team covers nearly 500 Financial Sponsor clients and their portfolio companies globally, benefitting from its relationships across key product offerings.
3. Where are you most active in the communications infrastructure space?
So, our activity is quite varied – we support public and private operators in the US from a financing perspective; we are also the first call for a number of infrastructure funds that seek our expertise abroad as they consider platform acquisitions. With a global reach, we advise on the immediate financing, as well as on long-term currency structures that make the most sense for the client’s goals. Furthermore, in many places where our clients are seeking growth, such as LatAm, we are able to offer boots-on-the ground operational support – there are not many financial partners that can offer that kind of breadth. We also collaborate closely with our Global TMT industry team who has a very active advisory practice in M&A and acquisition finance in telecom infrastructure.
4. How has the increased investment of international infrastructure funds affected the market, and how do you expect this to develop?
Infrastructure funds – which traditionally invested in airports, toll roads and pipelines – have warmed to the idea of communications infrastructure as a standard investment given the attractive secular forecasts, providing an additional source of capital to the sector. A number of characteristics align well with longer term investors including investment grade tenants and long-term contracts. We expect these funds to become increasingly active players and first call sources of capital as they gain natural exposure to deal flow and become further nuanced in the industry.
5. Any other trends you are seeing in financing?
JVs have certainly been a well-publicized vehicle, especially for the REITs. Not only is a JV an attractive alternative that doesn’t dilute shareholders, it allows a REIT to diversify its revenue streams through management fees. Given the opportunity in the market, we’ve also seen more speculative builds arise; while these ultimately may be supported by top credits, we’ve taken a cautious approach here, though we have appetite for the right sponsors and operating teams.
While capital markets will shift at some point, a cross-border bond issuance has presented an attractive cost arbitrage for many clients that have European operations. Clients considering hybrid security offerings have also found the European market offers an untapped pool of demand tension to drive pricing. Another benefit of Santander’s global platform and expertise is the ability to address a full menu of optimal capital structure alternatives across all geographies. We also work closely with our European capital markets teams to ensure holistic consideration of all options to best support our clients.
* Opinions expressed are those of the speakers individually, not necessarily any Santander entity; are for general information and teaching purposes; and shall not constitute securities or investment advice or offers of any kind.
Santander is a marketing umbrella for certain businesses of Banco Santander S.A. and its subsidiaries and as used herein may include any or all of such entities. Products and services may be provided by commercial bank, securities or other Santander affiliates. The information provided by such persons is not an offer to sell or purchase any securities. Certain financial products and services are required by law to be provided only by licensed representatives and affiliates. Inquiries regarding these will be referred to a licensed representative or affiliate. Information is provided for informational purposes only, and does not constitute any commitment by Santander to underwrite, subscribe for, or place any securities, extend or arrange any credit, or provide any other product or service. Santander does not provide tax, legal or accounting advice. For those services, and in to understand specific financial implications and consequences, you should consult your own professional advisors.
