Zara billionaire Ortega doubles money on US$460m telecom bet

[LONDON] 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.

Mr Ortega's investment firm, Pontegadea Inversiones, bought a 9.99 per cent stake in Spain's Telefonica's tower unit in mid-2018 in a deal that valued Telxius Telecom at about 3.8 billion euros (S$6.12 billion), according to data compiled by Bloomberg.

American Tower said Wednesday it's paying 7.7 billion euros for about 70 per cent of the unit's assets, according to a Telefonica spokesperson, giving the Zara founder a return of at least 103 per cent.

"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 spokesperson for Pontegadea declined to comment.

Mr Ortega, 84, has traditionally diversified his fortune by plowing the proceeds of Zara parent Inditex into a growing global real estate empire. Since the retailer's initial public offering in 2001, Mr Ortega has received more than US$9 billion of dividends, data compiled by Bloomberg show.

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Pontegadea publicly revealed its property holdings for the first time last year, giving Mr Ortega the largest real estate portfolio among Europe's super-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, the billionaire also bought a stake in natural-gas pipeline company Enagas. Operators of telecom towers and gas pipelines generally have predictable revenue and require relatively little investment once they are operative, characteristics that attracted Mr Ortega.

The son of a railway worker, Mr Ortega is Spain's richest person with a fortune of US$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.

Mr Ortega's fortune sank by US$9 billion last year, more than anyone else's in the world.

BLOOMBERG