Family Office For $54 Billion Zara Fortune Goes On Deal Spree

Fueled by proceeds from his fashion empire, the billionaire’s family office, Pontegadea, has gone on a deals spree that shows no sign of abating. In the past year, it accumulated stakes in energy ventures worth more than $1 billion and spent almost $2 billion on real estate globally.

Pontegadea, which oversees dividends that Ortega receives from the retailer he founded almost six decades ago, has been ramping up investments outside the industry that turned him into Spain’s richest person. As shares of Zara parent Inditex SA lost almost a third of their in the past five years, the family office helped him amass the largest real estate portfolio among Europe’s super-rich and make some big bets in other areas -- all without selling any stock.  

“Clients are increasingly mindful of the need to not to have all their eggs in one basket,” said Piers Master, a London-based partner who focuses on wealthy individuals at law firm Charles Russell Speechlys. “The post-pandemic world has made people think a lot about what is safe, and the conclusion for many of them is that there’s safety in diversification.”

Read more: Spain’s Richest Person Bets Billions on Prime US Property

Pontegadea, based in the northwestern Spanish town of Arteixo, has often invested in office and retail buildings in major cities to provide stable income, becoming the landlord to corporations including Amazon.com Inc. in Seattle. Some of its landmark property deals include Manhattan’s historic Haughwout Building, one of Miami’s tallest office towers and a 22-story skyscraper in Seoul.

But that strategy faltered during the coronavirus crisis, and the family office has increasingly pushed into energy since it acquired a stake in Spain’s gas transportation operator Enagas SA in 2019. Last month, it invested an undisclosed sum in the firm’s renewable-energy unit and bought a holding in a solar plant from Repsol SA for about 27 million euros ($27.7 million).

“Very few industries are growing at such a fast pace,” Rob Barnett, a senior energy analyst at Bloomberg Intelligence, said about renewables. “Such high levels of growth for clean energy may be sustained due to elevated fossil fuel prices, net-zero policies and other factors.”

A representative for Pontegadea declined to comment.

Ortega, 86, founded the company that grew into Inditex in 1963. The son of a railroad worker, the billionaire never had his own office while he worked at the retailer, preferring instead to be alongside employees in the main design area. He stepped down as Inditex chairman in 2011 and was replaced by long-time executive Pablo Isla. His only child from his second marriage, 38-year-old Marta Ortega, took over in April. 

Also read: Inditex Chairwoman’s First Task: Running Zara Without Russia

Ortega’s daughter from his first marriage, Sandra, 54, controls the shares that her late mother held in Inditex. She doesn’t have a role in the business and shifted her own fortune into real estate, pharmaceuticals and hospitality. Her $6.6 billion net worth makes her Spain’s richest woman, according to the Bloomberg Billionaires Index. 

Pontegadea, run by former Arthur Andersen manager Roberto Cibeira with a team of more than three-dozen employees in cities including Paris, London and Seoul, is helping soften the blow on Ortega’s fortune form the slump in Inditex shares. Some of the firm’s other big returns came from its 2018 bet on Telefonica SA’s tower unit -- one of its earliest moves outside of the real estate sector.

Still, most of Ortega’s $53.8 billion wealth remains from his roughly $48 billion majority stake in Inditex, according to Bloomberg’s index that tracks the world’s 500 richest people. The firm’s American depositary shares, which have slid 19% this year, were little changed Tuesday at 9:47 a.m. in New York trading.

While this year’s drop in stock price has cost him almost $14 billion in net worth, he still has more than enough for Pontegadea to continue its global spending spree. 

“What someone with $50 billion can do is vastly different to someone with $50 million,” Master said. “They can take greater risks.”

(Updates with Inditex’s share performance in 12th paragraph.)

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