The timing could not have been worse: the Madrid stock exchange had plummeted to its lowest level since the beginning of the year, with Pta14.5 trillion ($104 billion) - 20% of its capitalization - having been wiped off the market in the space of two months. Yet despite the turmoil in the equity market, Santander Investment, the investment banking arm of Banco Santander, took the decision in September to go ahead with the Pta4 billion flotation of around 30% of family-owned Rioja wine producer Federico Paternina.
"We knew it would be a success because it was a relatively small operation and we did a thorough pre-marketing exercise," says Enrique Casanueva, the investment bank's managing director. "We double and triple-checked our position before we took the decision to launch. To be truthful, I would not have taken that risk with a significantly bigger operation, such as our Pta45 billion IPO of supermarket chain Superdiplo."
Federico Paternina's successful launch in the midst of a market meltdown reflects the appetite for good-value family-owned Spanish companies, a sector that represents 65% of Spain's GDP and more than 80% of the country's industrial output. In many ways Federico Paternina is typical of the hundreds of small to medium-size companies now facing the challenge of survival in an increasingly globalized and predatory environment.