SPAIN Law and Practice Contributed by: Antonio Paredes, Carlos Saldaña, Manuel Martínez and Román Mejías, ZADAL
1.3 Acquisition Finance Preference for Acquisition Financing in the Last 12 Months Private credit has often been the preferred acquisi - tion financing route in Spain over the last 12 months, particularly for sponsor-backed mid-market deals. In practice, direct lenders are frequently chosen where the transaction requires rapid execution, higher cer - tainty of funds, confidentiality, or a structure that does not fit well in a broadly syndicated process (for exam - ple, a unitranche or other tailored package aligned with the acquisition timetable). That said, it has not been a universal preference. For larger, more “bankable” acquisitions, Spanish and international banks remain highly relevant and, as market conditions improved, have competed more actively on pricing and terms; this has reduced the situations in which private credit is the automatic first choice at the upper end of the market. The result is a segmented landscape: private credit leads where flex - ibility and execution certainty drive decision-making, while bank/syndicated solutions remain strong where scale and liquidity justify the public-style process. 1.4 Challenges Execution and Structural Frictions Spain is generally open to non-bank corporate lend - ing, but transactions can be more formalistic than in some common law markets. Creating and perfecting security often involves notarial formalities, registra - tions and related costs, and enforcement outcomes can be sensitive to procedure, timing and venue. In acquisition financings, financial assistance constraints can limit the target group’s ability to guarantee or grant security at closing, which often requires staged structures and increases execution complexity. Tax and Regulatory Change For cross-border private credit, withholding tax on Spanish-source interest (and the practical ability to apply exemptions or treaty relief) remains a key struc - turing and operational issue, influencing lender-of- record mechanics and payment flows. At EU level, AIFMD II is pushing loan-originating platforms to for - malise origination policies, risk controls and report - ing, increasing compliance effort and costs for some entrants. Separately, Spain has recently advanced an
Anteproyecto de Ley (draft bill) on consumer credit that moves toward authorisation/registration and Banco de España supervision for professional con - sumer credit providers; while this does not change the general position for corporate lending, it raises the regulatory bar for lenders active in consumer-facing credit and may indirectly increase scrutiny of non- bank credit activity. Market and Fundraising Constraints Expansion is also shaped by market dynamics: when banks compete aggressively on price and ancillary services, private credit often has to differentiate itself through speed, certainty and bespoke structures, or accept tighter returns. Fundraising remains feasible but more selective, with investors demanding stronger transparency and downside performance, and slow - er private equity exits can reduce natural refinanc - ing “take-out” and loan recycling. These factors have increased the importance of portfolio management, covenant design and work-out readiness for private credit providers operating in Spain. 1.5 Sponsored/Non-Sponsored Debt Focus on Private Equity Sponsors A significant share of private credit origination in Spain continues to be sponsor-driven, particularly in the mid-market. Providers are often most active in acqui - sition financings, add-ons and refinancings for pri - vate equity-backed groups because the governance framework, reporting discipline and execution time - table are clearer, which supports faster underwriting and tighter deal management. This “sponsor channel” remains a core pillar of the market. Lending to Founder-Owned and Public Companies At the same time, Spanish private credit is not limited to sponsor-backed borrowers: many lenders actively pursue founder- or family-owned (“sponsorless”) companies, reflecting the structure of the Spanish economy and the prevalence of individually owned businesses in Southern Europe. These transactions tend to require more bespoke covenant packages and closer attention to shareholder dynamics, but they are increasingly attractive for lenders seeking differ - entiated origination. Lending to public companies is possible but typically more selective and situational (eg, subsidiaries, acquisition bridges, asset-based
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