The 23-year-old has agreed to join the Portuguese outfit on a four-year contract and is expected to be formally announced by the club still today.
Balboa found playing time extremely limited at Real Madrid and is hoping this new challenge will reignite his career.
The Equatorial Guinea international will be brought into the team to play as a right-sided winger, a position filled last season by Maxi Pereira without much success.
Although
Balboa's asking price is set at €6 million, it is believed that Real Madrid have accepted a lower fee to secure a buy-back clause attached to his contract.
The ex-Racing Santander player has now become Benfica's third signing of the summer after
Ruben Amorim and Hassan Yebda.