BBK reinforces its investment in Iberdrola to continue shielding its Basque anchorage

The BBK Foundation is still one of the biggest players on the energy scene. The Biscayan entity maintains its shareholding anchorage in the Basque Country together with the family groups that have traditionally taken ownership of the electric company such as the Oriol, Urrutia or Arregui, among others. After the great merger of the savings banks (BBK, Kutxa and Vital) that gave rise to Kutxabank and the segregation of assets worth 2,000 million euros, the institution remained with close to 1.7% of the capital. It does not seem like much, but it is worth as much or more than the 57% that it controls in the Kutxabank bank.

The energy asset had barely changed until in May 2020, in the midst of the pandemic, the BBK Foundation began to increase its stake in Iberdrola with small purchases on the stock market. In two and a half years it has been done with 1.7 million shares of the electric after an investment of about 17.5 million euros. His last operation, the largest of all of them, was just carried out at the start of 2023.

According to CNMV records, the foundation chaired by Xabier Sagredo bought 500,000 Iberdrola shares for 5.5 million euros on the eve of Three Kings Day. It means paying 11.09 euros for each of them. It is 10% more than the last time he acquired titles from the electric company in November 2021 or 30% more than what he paid in 2020 for a package of titles similar to the current one.

In short, the movement increases the participation of Fundación BBK at a time when the organization has a greater supply of liquidity after the reactivation of bank dividends in 2022 after completely lifting the veto of the European Central Bank (ECB) for the pandemic. Despite the fact that Iberdrola represents a large part of the assets of the Biscayan Foundation, its real participation is not public information or available on its website. It was not possible to obtain comment on this, although financial sources place this percentage at around 1.8% at this time.

According to this percentage, the BBK Foundation would be the sixth largest shareholder of Iberdrola behind large funds and international firms. In the lead is Qatar, the liquefied natural gas (LNG) powerhouse of the Persian Gulf and host of the recent World Cup. The Arab state controls 8.7% of the electricity company through two companies (Qatar and DIC Holding LLC). Next comes Blackrock, the fund and ETFs manager, with 5.25%, followed by the Norwegian sovereign wealth fund (3.3%) and two other asset management firms: Vanguard (3%) and Capital Group (2). %).

Sagredo, director of Iberdrola since 2016, replacing Xabier de Irala, has increased the commitment to diversify the Fundación BBK’s portfolio and income flow, although more than 80% remains exposed to banking (with 57% of the shares Kutxabank) and energy (with Iberdrola). As the majority shareholder of the financial institution, the foundation maintains an indirect exposure to an industrial portfolio of companies that was valued at 1,634 million euros at the end of 2021, 23% less than in 2020 due to the divestment in the operator Euskaltel.

Other prominent names in the portfolio in addition to those already mentioned are the CAF railway, where it controls 14% through Kutxabank, which is worth close to 140 million on the stock market. Vidrala, Red Eléctrica and Arteche are three other companies in the foundation’s orbit and invested close to 20 million euros throughout 2021, according to information contained in the foundation’s 2021 annual report, although there are no reports on the evolution or the accumulated balance of these operations.

The old BBK box – which would later distribute assets with the foundation – became one of the most important partners in Iberdrola before the financial crisis of 2008 when it came to control between 7.5% and 10% of the electricity company. Together with the extinct Bancaja, ‘rescued’ by Caja Madrid in the Bankia mega-fusion, he formed the circle of power that helped the current president Ignacio Sánchez-Galán defend his position against the assault of the ACS by Florentino Pérez, who did not sit down on the board of directors despite the fact that the construction company managed a 20% stake in the capital.

BBK was progressively diluted in the successive capital increases of the electric company -especially after the purchase of Scottish Power- and made cash by reducing titles until reducing its presence to a minimum. In April 2017, it disappeared from the CNMV’s radar, falling below the 3% required to notify its presence in the capital. It was then that he sold a package of 1.9% of the capital until he remained in his current position.

In recent years, the BBK Foundation has tried to build an investment portfolio that finances Obra Social in the style of Criteria Caixa for the La Caixa Foundation. The investment philosophy of one and the other coincide. According to the BBK, the investments held by the Basque Banking Foundation are classified, for management purposes, into three different portfolios, according to the objectives of each of them: permanent (only Kutxabank), those subject to the Reserve Fund (under criteria ) of high liquidity and regulatory supervision) and the so-called Stabilization Fund (where it directs the surpluses once the activity of the foundation and the Reserve has been satisfied).

The collection of dividends from Kutxabank represents the main source of income for the BBK Foundation, according to the firm itself. In 2020, the institution received 60 million euros through this channel, 38% less than in 2019. The following year, the figure was further reduced to 54 million, 10% less. However, during the recently closed 2022, this figure may multiply after the recovery of shareholder payments in the banking sector after the end of the ECB veto. The Biscayan BBK would have pocketed nearly 100 million euros in dividends last year from Kutxabank, compared to 55 million from the Gipuzkoan Kutxa foundation -which gave the bank its brand- or 18 million from Alava’s Vital.

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