January wasn’t over yet when Pontegadea CEO Roberto Cibeira made a comment that caused an uproar in the Madrid Auditorium, where he was attending a real estate forum. “If we find something that meets our criteria, of course we will invest in Spain because we would have liked to have invested more,” said the top manager of the group that manages the assets of Amancio Ortega, Spain’s largest fortune. Cibeira was referring to the context of falling real estate prices that ushered in 2023, an opportunity for a company like the one he leads, with a mandate to invest hundreds of millions annually to achieve profitability and with buildings that have over a Spread across a dozen countries, a value exceeds 18,000 million. But with just over a month remaining until the exercise is completed, the largest operation Pontegadea has carried out in Spain (and around the world) this year has nothing to do with bricks. Last week it announced the purchase of 49% of a mega renewable energy portfolio, in which Repsol will hold 51%. In return he paid 363 million.
Amancio Ortega’s recent purchase is neither an event nor a surprise. In fact, this corresponds to the investment behavior that Pontegadea has shown recently in Spain. “It is a further commitment to diversification with a reference partner who is also not new,” emphasizes the company’s market analysis team. In fact, the purchase is strongly reminiscent of the purchase with which the group celebrated its debut in renewable infrastructure: in 2021 it acquired part of a wind farm for 245 million. The percentage and the seller were the same as now. Two years later and with another acquisition (also from Repsol) of a photovoltaic park, Pontegadea underlines that its clean energy portfolio already has a capacity of over 1,000 megawatts (MW).
The company seems comfortable in this sector. His largest industrial holding – one of the group’s two arms along with real estate investments – remains Inditex, the textile giant founded by Amancio Ortega, which has made him one of the richest men in the world (his net worth currently stands at (according to Forbes) more than 86 It also owns minority shares in Enagás Renovables, the power grids of Spain (Redeia) and Portugal (REN), and Telxius, a telecommunications tower company it shares with Telefónica.
In short, the positions of Ortega’s investment division have been increasing for years in companies that have a common denominator: they are all connected to some type of infrastructure and have reference partners in charge of day-to-day management. “Pontegadea’s philosophy is to continue creating economic prosperity, not through direct attention to the user, but with stable long-term services,” concluded the Galician company. Refraining from providing direct services is a way to avoid a potential reputational crisis for Inditex or one of its brands with global implementation (e.g. Zara, Massimo Dutti or Bershka) in the event of a setback.
It is a strategy that, in its main source of activity, is somewhat reminiscent of the strategy it pursues. Pontegadea owns dozens of properties that it rents out, mainly offices whose maintenance is entrusted to third parties. Real estate assets make up more than four fifths of the investment portfolio. Although its presence in the world of renewable energy has not stopped growing in recent years, we have to go back to 2016 to remember the last eye-catching property purchase the company made in Spain. It was the Cepsa Tower, one of the skyscrapers that dominate the capital’s northern skyline, and spending rose to 490 million, according to figures published at the time.
Growth potential
Buying an almost 250 meter high block in Madrid or, as is now the case, investing in twelve wind farms and two photovoltaic systems spread across Spain seem to be very different things. But everything corresponds to the need to look for investments in markets where Pontegadea sees growth potential, which adapt to its return expectations and which also allow long-term preservation of the assets. The logic is different from that of mutual funds, which have deadlines for selling and repaying your bet. The mandate for Ortega’s assets is clear: buy, buy and buy. And that’s because its main source of income, namely the dividends it receives annually on its 59.29% stake in Inditex (translated: 2,217 million this year alone), would become less important (and in a situation like… too very valuable). (the current inflation crisis) if they remained immobile.
This results in Pontegadea investing astronomical figures year after year. In 2023 there are over 1,000 million so far. Few companies enter the market without going through the analysis table of the A Coruña-based company. But very few meet the characteristics described above and the size you need to sustain such volume of business. Especially for a company, another house brand, that has a relatively modest workforce: it doesn’t reach a hundred people despite being present in 10 countries. Therefore, it seems that in recent years the Spanish real estate market has not offered the opportunities that one of the largest family offices (as companies that manage large family fortunes, called in financial jargon) in the world are looking for.
The situation is in stark contrast to what is happening on the other side of the Atlantic. In recent years Pontegadea has been intensely active in the American real estate market and, based on the numbers used, is light years away from everyone else. There, Ortega’s company hosts large technology companies whose offices it buys to rent out, and in 2022 carried out the largest operation in its history: $905 million (at that time practically at par with the euro) for the acquisition of seven logistics centers that offer them Services for sales giants such as Amazon or Nestlé. In addition, the company has purchased large blocks of semi-luxury rental apartments in both New York and Chicago last year and this year.
All of this makes Pontegadea the largest market in the United States in terms of investment volume, thanks to assets that ultimately seem difficult to find elsewhere. But Ortega also seems to have found the solution with renewable energies to keep Spain, the country of origin of his business empire, as the second largest market for the group. After all, Cibeira discreetly warned in his lecture in Madrid eleven months ago: “We will also keep an eye on the infrastructure.”
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