-Analysis-

MADRID — Clearly the billionaire Carlos Slim had been eyeing investment opportunities in Spain for some time now. And with the recession slowly ending here — at least for the rich — he is not the only Mexican to have arrived to do some serious shopping.

The world's second richest man, with total assets estimated at around $77 billion, became a principal partner of the Catalan bank La Caixa (now Caixa Bank) back in 2011, after buying almost a million shares. In 2012, he bought 439 buildings belonging to the bank through his real estate firm Inmobiliaria Carso. Other investments include buying up 1.98% of Prisa, the group that owns the Madrid-based daily newspaper El País.

The wave of Mexican investors arriving here is starting to look like a reversal of roles, more than 500 years after Spaniards conquered Mexico. Mexican investors are sinking their pesos both in strategic sectors, and on a scale that is leaving local observers awed.

Antonio Hernández, an energy and international strategy partner at the Spain offices of international consultants KPMG, says Mexico has become the sixth-largest foreign investor in Spain and No. 2 outside of the European Union. A 2013 study estimated accumulated investments valued at almost $21.5 billion.

In 2014, Mexico invested just under $1.2 billion in Spain, which was about 40% of all Latin American investments, and it was already the leading investor in the first half of 2015.

Several factors are helping send Mexican capital into Spain. Firstly, for these investors, Spain is a gateway to the eurozone, says Massimo Cermelli, an economics professor at the Deusto Business School in Madrid.

"Spain is the only Spanish-speaking country in Europe, which makes it a privileged entry point for Mexico," he says.

That was the point for Gruma, a food conglomerate, which last March bought the Fat Taco and Azteca Foods ready-made tortillas and condiments business, run until then by Azteca Foods Europe. It plans to distribute its products in more than 20 European countries, and in the Middle East and North Africa.

The recession in Europe, which was worse in southern Europe, helped attract these investors by knocking prices down to more "attractive" levels. "Let's not forget that right now it is cheaper to set up a business in Spanish cities like Madrid, Barcelona or Valencia, than anywhere else in Europe," says José Carlos Diez, an economist at the Alcalá de Henares University.

Another factor is the saturation of the Mexican market. "We needed to expand abroad to grow," says Roberto Ibarra, head of Turismo y Convenciones, Latin America's biggest events organizers. Last May Ibarra opened the firm's European subsidiary, T&C Europa, in Madrid, from where it will serve clients in Europe, Africa and Asia.

Mexican firms also want to reduce their dependence on the U.S. economy. The United States remains Mexico's top trading partner and export market, and any downturns there inevitably have drastic effects on Mexico.

The right time

Aware of the opportunity, Mexico and Spain have signed a series of working agreements, including the June 2014 "Plan of Action" to boost political dialogue. This was "positive in giving Mexican investments a privileged position in Spain, and the same for Spanish capital in Mexico," says the economist Diez. "Spain becomes a bridge for Mexico, allowing entry into European markets, while Spanish firms established in Mexico would have privileged access to U.S. and Canadian markets" tied to Mexico through NAFTA.

Spain itself is the second eurozone investor in Mexico, with an accumulated portfolio worth more than $51 billion, and 5,495 commercial firms. It is the third worldwide, after the United States and the Netherlands, according to Mexico's Economy ministry.

Deusto University's Cermelli says the Spanish-Mexican Plan has fortified the countries' political ties, which gave a boost to mid-sized Mexican firms. For bigger fish, the Spanish Foreign Minister himself, José Manuel García Margallo, has helped identify potential obstacles to their expansion on the peninsula.

This outward expansion has also coincided with significant falls in direct foreign investment in Mexico and Latin America, in 2014 and 2015.

In which sectors are Mexican firms investing? Finance is a favorite, with new Mexican stockholders injecting vital cash into banks like La Caixa, Sabadell and Popular. Others are food, real estate and heavy industries.

In 2011, Bimbo México bought its namesake brand in Spain from Sara Lee, for a little over $110 million. Last July, it bought a competing brand, Panrico, from the Oaktree fund for $209 million. Bimbo México operates in Spain and Portugal through its subsidiary Bimbo Iberia, which handles over 100 food labels.

Another Mexican firm, Sigma, has completely bought out one of Spain's household meat brands, Campofrío, from a Chinese group, WH. That deal was valued at $354 million. ADO, Mexico's second passenger coach operator, has bought Avanza, the Madrid-based intercity bus firm, for over $880 million.

In 2014, Carlos Slim became the biggest stockholder of FCC, an infrastructures and services group, after buying just over 25% of its shares from the Koplowitz family. He plans to use FCC for projects in Latin America.

Mexican investments in Spain began to increase in 2012 and have continued upward through 2015, says Hernández from KPMG. Thus, while there may be a creeping recession in Latin America and global growth appears lackluster, Mexican capital sees Spain as the new Eldorado.