Spain and the United Arab Emirates are set to sign a bilateral agreement aimed at promoting and protecting investments in a reciprocal manner. The pact comes as Abu Dhabi prepares for a major move as a key shareholder in Naturgy, the leading Spanish gas company and the third-largest electricity group in the country, in a multibillion-dollar corporate transaction.
The Council of Ministers has authorized the signing of the Spain–United Arab Emirates agreement, whose terms have already been agreed by both governments and have also received the European Commission’s approval. The government has not disclosed details of the terms with the UAE, but official sources emphasize to Spanish daily El Periódico de España that the bilateral framework has long been under discussion and bears no relation to Naturgy.
The bilateral framework to facilitate reciprocal investments will be formalized on the eve of a major cross-border corporate move involving both nations and their governments. The TAQA group, Abu Dhabi’s state-owned energy company, is negotiating with the private equity funds CVC and GIP to acquire its stakes in Naturgy, which total 41.3 percent. That would require a full takeover bid for the entire group, currently valued at about 23 billion euros after recent market gains. TAQA is also seeking an alliance with CriteriaCaixa, the investment arm of the La Caixa Foundation and the largest shareholder of Naturgy with a 26.7 percent stake, to ensure it remains in the ownership structure.
The government’s mandatory approval will be required for this entry by the United Arab Emirates, passing through the so-called anti-takeover shield. This strengthened rule, enacted last summer, compels foreign groups to obtain state authorization to acquire more than 10 percent of strategic sectors and allows the imposition of conditions on such investments.
Spain previously used the anti-takeover shield in Naturgy and in 2021 placed conditions on the Australian fund IFM to approve its partial offer seeking about 23 percent of Naturgy’s capital. The bid faltered, achieving roughly 10 percent initially, and has since gradually added small holdings, putting the company at about 15 percent control.
That earlier IFM entry was conditioned on Spain’s support for investments in strategic renewable projects, preserving Naturgy’s headquarters and management in Spain, maintaining a prudent dividend policy, sustaining a significant portion of the local workforce, and keeping the company’s debt ratio within investment-grade limits. IFM was also obligated not to support a delisting for three years.
Investment promotion and protection treaties serve to shield mutual investments by companies from each country within the other country’s territory. They typically include fair and equitable treatment under international law, prohibitions on unjustified or discriminatory measures, and mechanisms to resolve disputes. Most APPRI agreements Spain has signed run for ten years and are renewed for two-year intervals unless either state withdraws.