Zara Billionaire Ortega Doubles Money on $460 Million Telecom Bet
(Bloomberg) -- Amancio Ortega more than doubled his money in three years on a rare foray outside of real estate, the usual focus of the billionaire’s personal investments.
Ortega’s investment firm, Pontegadea Inversiones, bought a 9.99% stake in Spain’s Telefonica SA’s tower unit in mid-2018 in a deal that valued Telxius Telecom SA at about 3.8 billion euros ($4.6 billion), according to data compiled by Bloomberg. American Tower Corp. said Wednesday it’s paying 7.7 billion euros for about 70% of the unit’s assets, according to a Telefonica spokesman, giving the Zara founder a return of at least 103%.
“When Pontegadea entered into Telxius, the towers business wasn’t as interesting as it is now,” said Ignacio Cantos, investment director at ATL Capital in Madrid. “It’s proved to be a very good deal.”
A spokesman for Pontegadea declined to comment.
Ortega, 84, has traditionally diversified his fortune by plowing the proceeds of Zara parent Inditex SA into a growing global real estate empire. Since the retailer’s initial public offering in 2001, Ortega has received more than $9 billion of dividends, data compiled by Bloomberg show.
Pontegadea publicly revealed its property holdings for the first time last year, giving Ortega the largest real estate portfolio among Europe’s very rich, at 15.2 billion euros. The firm completed the purchase of a central London office building last month and counts landmarks such as Manhattan’s historic Haughwout Building among its previous purchases.
In 2019, Ortega also bought a stake in natural-gas pipeline company Enagas SA. Operators of telecom towers and gas pipelines generally have predictable revenue and require relatively little investment once they are operative, characteristics that attracted Ortega. Private equity giant KKR & Co. is also an investor in Telxius, controlling a 40% stake.
The son of a railway worker, Ortega is Spain’s richest person worth $66.5 billion, according to the Bloomberg Billionaires Index. His returns from the all-cash deal for Telxius Telecom’s masts division help mitigate the impact of the pandemic on Inditex, which has been forced to shut stores.
Shares in Inditex are down more than 17% over the past year and the stock fell 1.2% Friday as of 1:48 p.m. in Madrid.
Ortega’s fortune sank by $9 billion last year, more than anyone else’s in the world.
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