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Friday, February 3, 2023

This is how Amancio Ortega invests: renewable energies, telecommunications and emblematic buildings

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A look at the moves of 2022 reveals the interests of Amancio Ortega when acting as an investor. The founder of Inditex, the world’s largest textile group and source of his wealth, this week acquired 5% of Enagás Renovable, a subsidiary of the Spanish gas giant focused on developing green hydrogen. The operation, estimated at €3.5 million, pales in comparison to the investment completed in the US by Pontegadea, the group of companies with which Ortega manages his fortune, which will reportedly be the next owner two weeks ago of a skyscraper of 234 meters with about 500 luxury floors and an estimated price of about 500 million.

Two further appearances round off the picture of the entrepreneur’s previous investments this year. In April, it acquired a 30,000 square meter office building in Glasgow, Scotland. The Scottish media dubbed it the largest office property deal in the country’s history for the €237 million in which it was scrambled. And two months earlier, in February, an increase in its stake in Telxius was announced. Pontegadea already owned 10% of the telecommunications infrastructure company through a joint venture with Telefónica. After the enlargement there was control of 30%.

The four operations are grouped into three plots in which Ortega seems to move like a fish in water: real estate, energy, and telecommunications. None were outside of Pontegadea before 2022. The group, which posted a consolidated profit of 1,606 million last year, is operationally split into two major companies: the industrial holdings of Spain’s richest man and the properties he owns as investments (not these for personal use). From the former he receives dividends; thereof rental income.

Ortega is not only the richest man in Spain. With a fortune currently estimated at more than 58 million euros, he is one of the 20 richest in the world according to the list forbes. The 59.29% stake he holds in Inditex (the parent company of Zara, Bershka, Massimo Dutti, Pull&Bear, Oysho and Stradivarius) is by far his most valuable asset and source of income: last year alone he reported 1,294 million . But it also has another peculiarity, namely that it is not an investment in the strict sense, but the embodiment of a company that he himself founded in Galicia more than half a century ago. A lucrative business that has led him to diversify his wealth over the years.

Aside from what it received from Inditex, Pontegadea brought in another $29 million in dividends last year. In addition to the stake in Telxius mentioned above, the company has owned 5% of Enagás since 2019 (different from the 5% it just bought in its renewable energy subsidiary), and last year acquired 5% of Red Eléctrica (currently Redeia ). Maximum amount that a shareholder other than the State Industrial Participation Company (SEPI) can hold in the sole operator of the Spanish electricity system. A day after the publication of this investment, another one was announced in the Portuguese counter-company: Redes Energéticas Nacionais (REN). With 12%, Ortega also became the second largest shareholder there.

little divestment

Contrasting with this brisk investment activity, divestments have been few in recent years, though Inditex and Ortega themselves (whose dividends were halved in 2020) have also felt the onslaught of the pandemic. Most prominently, in early 2021, it sold the telecom towers Telxius had in Spain, Germany, Brazil, Peru, Chile and Argentina. A decision on which Ortega had little influence, but which brought him around 770 million thanks to his 10 percent stake at the time.

It is more difficult to follow the complete trail of real estate investments. The buildings that Pontegadea owns add up to a value of more than 15,200 million according to last year’s balance sheets. They are spread over three continents and nine countries (USA, Great Britain, Spain, Canada, France, Italy, Portugal, South Korea and Mexico). The top three make up more than half of the portfolio and include what real estate jargon calls buildings trophy. These are emblematic properties because of their architecture, their location or the tenants they have, which make them considered very safe investments.

Ortega is a landlord of large technology companies such as Facebook, whose offices in Seattle (western United States) he bought in 2019, or Google, from which he rents several floors of the Torre Picasso in Madrid. In London and also in 2019, he spent more than 700 million to acquire The Post Building, a central building that houses the consulting firm McKinsey. But although offices are his main preference when buying buildings, he also owns commercial properties and hotels.

It even has windmills. At the end of 2021, Pontegadea acquired 49% of Delta, a Repsol wind farm in the province of Zaragoza. It’s perhaps his most unclassifiable investment, halfway between industry and real estate. But deep down, she’s no stranger to his career. It was another step forward in the energy market. The first, as highlighted when the 245 million payout was announced, focused on renewable sources.

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Source elpais.com

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