Category: Billionaires

What’s Next For Forbes’ Billionaires

On Mar 07 2012

I’ve once again had the privilege to work on Forbes’ World’s Billionaires list with a great team (I was a country editor). This year, we heard a lot more anxiety from billionaires as they manage uncertain markets. As a quick aside, I think our relationships with billionaires is what differentiates us from Bloomberg’s new Billionaires Index (which by the way was started by a former Forbes billionaires editor, Matt Miller). I spend a lot of time on the phone and messaging billionaires and their representatives to understand how they view their businesses and global economic prospects. This one-on-one relationship has given me and my colleagues at Forbes a clear indication of what the world’s global entrepreneurs think the near-term future holds.

Despite a bumpy 2011, billionaires I spoke with are cautiously optimistic for the next twelve months. As one former real estate billionaire, Jorge Perez, put it when I was speaking to him recently, he made money last year after a couple of unprofitable years, and that’s good news – he may find himself back on the billionaires list next year if all his projects continue to grow as planned.

The one constant across the board is that many billionaires are diversifying. Perez for example, who made a bundle on high-end condos during the boom is now looking at middle-market and affordable housing, condos as well as rentals. Billionaires are investing in new areas like tech which happens to the hottest (if one of the only hot) IPO sectors at the moment. When you see Mark Zuckerberg ready to hit the jackpot with his Facebook IPO, or Japan’s Yoshikau Tanaka doubling his fortune as his online social network Gree skyrockets, it make sense. Two of Ukraine’s billionaires who made their billions from heavy industry like pipes and steel are investing in the tech space: Victor Pinchuk announced plans to invest in e-commerce, telecommunications and social network start-ups at Davos and Ukraine’s richest , Rinat Akhmetov, is staking out space on the internet by merging operations with new Ukrainian billionaire, Petro Poroshenko.

Three other sectors are also making billionaires particularly happy: food, retail and energy. I see it as getting back to basics with what most people seek: something to eat, shelter and heat. That’s how Ukraine’s Poroshenko got on the list (see Forbes newcomer slideshow). The value of his chocolate business (he is known as Ukraine’s chocolate king) is increasing. In the Czech Republic, Andrej Babis’s food conglomerate Agrofert, continues to grow. As for shopping, Japanese billionaire Tadashi Yanai’s Fast Retailing stock price is up 35% over the past year; it encompasses brands from price conscious, Uniqlo, to fashionista brands, Theory and Helmut Lang. (see my comment on diversifying)

And then there is energy, and I am not talking so much about oil, as I am about electricity. Several Turkish conglomerates for example are making big energy plays which are buoying net worths even as the Turkish stock market falters, and the Turkish lira is down against the dollar. Ahmet Calik, who publishes Forbes Turkey, is investing in energy distribution and renewable energy, building power plants in Iraq, Turkmenistan and Uzbekisan. Ukraine’s Rinat Akhmetov whose steel fortune is suffering, is buoyed by investments in coal mines and electricity generation. Solar and wind energy are also important areas; Romania’s sole billionaire, Dinu Patriciu, is investing in solar and wind projects in Europe.

Where work needs to be done: mining and banking. The Bloomberg World Mining Index is down 22% over the past year. That has helped shave off nearly a billion from the net worths of the Kazakh trio – Alijan Ibragimov, Patokh Chodiev and Alexander Machkevich (2012 NW each: $2.8 billion versus 2011 NW each $3.7B). Declining bank stocks knocked three Kazakh billionaires off the list: Timur Kulibaev, Dinara Kulibaeva and Nurzhan Subkhanberdin. (see Forbes dropoff slideshow) My hypothesis: they’ll be working on diversifying over the next year.

Rinat Akmetov, Ukraine's richest

Forbes Billionaires and the Global Economy

By admin

On Mar 09 2011

In Analysis, Billionaires

Image via Wikipedia

This is the eighth year I have worked on Forbes’ World’s Billionaires. As always, I find the personal tales fascinating. I met with new Ukrainian billionaire Yuri Kosiuk at the Four Seasons in New York last fall when he was pitching Wall Street for investment dollars for his poultry producer. We had coffee and a long chat about how his business is faring in Ukraine’s often fraught political environment. His take: if you know how to play the game you can succeed. We heard the same from Aliko Dangote, the Nigerian billionaire who increased his fortune six-fold when he took his cement operations public. He is convinced he can maneuver the politics in Africa to build a continental (and global) cement giant.

On a macro level, the total net worth and number of billionaires says a great deal about how a country is doing. My thesis: in Ukraine and Russia, a disproportionate amount of wealth looks to be accumulated in a few hands, the relic of a centralized Soviet system (in Kazakhstan we don’t see the same because the state still controls many assets under the tight grip of President Nursultan Nazarbaev) (Caveat: some of the wealth is held in investments in other countries but I think my thesis holds true for the most part). Meanwhile, in Eastern Europe, though central planning was also instituted, the political systems and opposition to communism emerged differently and there appears to be more spreading of wealth and perhaps the opportunity to still amass wealth. (see stats below) Indeed, Poland’s robust stock exchange has regional players flocking to go public. Poland is serving as a model for wealth creation.

We can also see where money is coming from – US’ biggest billionaire names come from tech, investments/finance and retail – think Bill Gates, Warren Buffet and Waltons of Wal-Mart whereas Western Europe is all about luxury brands like LVMH’s Bernard Arnault or Tod’s Diego Della Valle. In Eastern Europe, we see finance as a leader, and agribusiness. In the CIS, commodities dominate, though agribusiness is growing.

Total 2011 Billionaires Net Worth: $1.3 trillion
GDP 2011 forecast (World Bank): $15.3 trillion
8% of country’s GDP
Total 2011 Billionaires: 412
Total Population: 315 million

Russia

Total 2011 Billionaires Net Worth: $432.7 billion
GDP 2011 forecast (World Bank): $1.6 trillion
27% of country’s GDP
Total 2011 Billionaires: 101
Population: 140 million

Ukraine

Total 2011 Billionaires Net Worth: $30.3 billion
GDP 2011 forecast (World Bank): $165 billion
18% of country’s GDP
Total 2011 Billionaires: 8
Population: 45 million

Kazakhstan

Total 2011 Billionaires Net Worth: $12 billion
GDP 2011 forecast (World Bank): $144 billion
8% of country’s GDP
Total 2011 Billionaires: 5
Population: 15.6 million

Poland

Total 2011 Billionaires Net Worth: $8.9 billion
GDP 2011 forecast (World Bank): $472 billion
2% of country’s GDP
Total 2011 Billionaires: 4
Population: 38 million

Czech Republic

Total 2011 Billionaires Net Worth: $12.3 billion
GDP 2011 forecast (World Bank): $185 billion
6% of country’s GDP
Total 2011 Billionaires: 3
Population: 10 million

Romania

Total 2011 Billionaires Net Worth: $3.3 billion
GDP 2011 forecast (World Bank): $163 billion
2% of country’s GDP
Total 2011 Billionaires: 2
Population: 21 million

Nigeria

Total 2011 Billionaires Net Worth: $15.8 billion
GDP 2011 forecast (World Bank): $230 billion
GDP/NW: 7% of country’s GDP
Total 2011 Billionaires: 2
Population: 160 million

Rich Lists

By admin

On Sep 24 2010

In Analysis, Billionaires

: Image via Wikipedia

This week the Forbes 400 Richest Americans list came out (which I worked on) amidst the backdrop of the glamorous Clinton Global Initiative. Meanwhile most Americans are doing poorly – recent data from the Federal Reserve states that U.S. household wealth fell by $1.5 trillion in the second quarter, indeed last year’s poverty rate was at a 15 year high. Unemployment is still worrisome, and most people I know are working much harder for much less. So why should we get excited about a rich list which applauds ridiculous accumulations of wealth?

There is substantial economic commentary behind the numbers. As editor Luisa Kroll notes in her intro, more than half of the leaders on the list increased their fortunes. That means money is being made, which means hope for the U.S. economy. As one former editor of the list used to say, if the people on the 400 make money, it trickles down and the rest of us make money. Tech is one area that remains hot and should be the focus of U.S. investment in education and R&D spending.

Another rich list that I recently worked on, Thailand’s 40 Richest, tells an even more interesting tale. The country faced political uproar in May that saw its stock exchange set on fire. Yet the economy rebounded well beyond where it was a year ago. Behind the surface political instability is a nation which finds balance in its long reigning monarch, King Bhumibol (who happens to be the world’s richest royal). Rising incomes are also boosting businesses. Both factors have led investors to pour money into the market. But whether King Bhumibol’s successor will have the same effect when the time comes is up in the air.

So then you can get into the celebrity and drama which is why Warren Buffet appears with Jay-Z on the Forbes 400 web page. Shakespeare would also have a field day: fallen titans, divorce, mental illness. Have a read.

Ukraine’s Gas Wells and Windmills

By admin

On Aug 25 2010

In Billionaires, energy

Ukraine is currently debating grain quotas and the jury is still out on the country’s new president but the energy sector is making waves.

Poland’s richest man, billionaire Jan Kulczyk, who bought into Ukraine’s natural gas production in June, has already started drilling. Kulczyk Oil Ventures launched the M-19 well at the Makiivka gas deposit in Donetsk region.

Earlier this summer, Kulczyk Oil Ventures, through its subsidiary, Loon Ukraine Holding, bought a 70% stake in of one of Ukraine’s largest private producers of natural gas, KUB-Gas, for $45 million. Kulczyk Oil Ventures, which went public in May on the Warsaw Stock Exchange (symbol: KOV); used part of the proceeds from the IPO to close deal in Ukraine.

In a press release, Tim Elliott, the President and Chief Executive Officer of Kulczyk Oil, stated. “We are pleased to be starting the drilling of our first well in Ukraine only a few months after closing our acquisition. The timely implementation of this first step in our plan to increase the production and reserves of KUB-Gas was made possible by the diligence and teamwork of the technical and operational teams of both KUB-Gas and Kulczyk Oil.”

Meanwhile, startup, UkrWindEnergo, just announced it is partnering with New Power Technologies to jointly develop, own and operate a 400 megawatt wind power park in Sovetskiy District, Autonomous Republic of Crimea, Ukraine. In August, Ukrainian President, Viktor Yanukovych, stated he was focused on bringing such projects to Crimea.

Ukraine’s wind potential, according to The Institute of Energy, Dnepropetrovsk State University, is estimated at about 140,000 wind turbines with up to 10 kWh each in annual capacity. Currently, the Ukrainian Wind Energy Association says the total capacity of wind power plants set up in the country is 1,200 kWt.

Ukraine Econ Upturn As its Billionaires Start to Raise Cash

By admin

On Jul 22 2010

In Billionaires

Ukraine’s youngest billionaire, Kostyantin Zhevago, who almost lost his iron ore producer, Ferrexpo, when markets crashed two years ago, is back raising cash. According to Millenium Capital, Ferrexpo completed its road-show July 16 planning to place Eurobonds worth $500 million. The company plans to ramp up production by 50% over the next five years, and has the iron ore reserves to do so. ADDENDUM: It appears the Eurobond issue has been postponed.

This follows on the heels of fellow billionaire, Rinat Akhmetov, and the announcement that his steelmaker Metinvest raised $700 million via syndicated loan.

Ukraine has had success recently, negotiating a new $14.9 billion loan program with the IMF. As a result, Fitch upgraded Ukraine’s sovereign bonds stating “The IMF agreement improves the sovereign’s financing flexibility and will unlock additional funds from other international financial institutions.”

There is still a long-way to go — Ukraine’s real GDP fell 15.1% in 2009, according to Fitch, marking the second-worst economic performance after Latvia of the over 100 sovereigns rated by the agency — but billionaire confidence appears to be back up.

Gold Tussle: Russia vs. Kazakhstan

By admin

On Jul 13 2010

In Billionaires

Plans by the owners of Russia’s top gold producer, Polyus Gold, including Russian billionaires, Mikhail Prokhorov and Suleiman Kerimov, may be thwarted in their efforts to buy Kazakh gold miner KazakhGold Group.

The Kazakh government this week annulled a merger of the two evoking the 2007 Subsoil Law which allows the government to annul any contract involving the use of subsoil resources in the country if it is of national strategic importance the government. The government is reportedly concerned over a low deal price.

If the deal were to go ahead, the merged company – to be called Polyus Gold International Limited – is expected to become one the world’s leading gold mining companies, whose shares will trade on the London Stock Exchange as a single company. (Polyus Gold plans to delist its ADRs from the LSE.)

Event timeline:

*December 2008, Polyus Gold announced first offer for stake in KazakhGold; estimated above $700 million

*April 2009, negotiations announced to adjust offer. In a statement KazakhGold wrote, the “Company’s production levels and working capital levels have deteriorated substantially more rapidly than previously anticipated and KazakhGold requires a funding commitment, in order to continue to operate as a going concern in its current form. Due to these wholly exceptional circumstances, the terms of the Proposed Partial Offer as announced on 29 December 2008 are no longer valid, however, KazakhGold and Polyus Gold remain in active negotiations to agree revised terms in respect of the Proposed Partial Offer.”

The price was adjusted down about 60%.

*July 2009: Polyus Gold, through its indirect wholly-owned subsidiary, Jenington International Inc. (“Jenington”), made a recommended partial offer to acquire 50.1% of the issued and to be issued share capital of KazakhGold. The Partial Offer was declared unconditional on 14 August 2009.

*June 25, 2010: KazakhGold Group Limited (“KazakhGold”); its wholly-owned subsidiary, KAZAKHALTYN MMC JSC (“Kazakhaltyn”); and Jenington International Inc., a wholly-owned subsidiary of OJSC Polyus Gold (“Jenington”); commenced proceedings in the High Court of Justice (Chancery Division) in London against five members of the Assaubayev family who were former directors of KazakhGold; Gold Lion Holdings Limited (“Gold Lion”) and Hawkinson Capital Inc., (“Hawkinson”). Gold Lion was, prior to completion of the Partial Offer by Jenington to acquire 50.1% of the issued share capital of KazakhGold in August 2009, the principal shareholder of KazakhGold. The defendants include Kanat Assaubayev, who was Executive Chairman of KazakhGold until the completion of the Partial Offer, and Aidar Assaubayev, the former Executive Vice Chairman, who continued as a director until his appointment was terminated on 17 June 2010.

*June 30, 2010, KazakhGold and Polyus Gold, which owns 50.1% in KazakhGold via its subsidiary Jenington International Inc, announced a reverse merger, under which KazakhGold would acquire its parent company Polyus Gold. Under the scheme, one share of Polyus Gold will equal 9.26 Global Depositary Receipts of KazakhGold, and one American Depositary Receipt of Polyus Gold will equal 4.885 GDRs of its subsidiary.

Ukrainian billionaires behind Privat Group Take on Russian Billionaire Makhmudov

By admin

On Jul 08 2010

In Billionaires

Ukrainian billionaires, Henadiy Boholyubov and Ihor Kolomoyskyy, via Mantara Holding, a company close to the their jointly-owned Privat Group, may be in for a fight over Ukrainian locomotive-maker, Luhanskteplovoz, with Russian billionaire, Iskander Makhmudov.

Mantara Holding filed a lawsuit with the State Property Fund of Ukraine (SPF) to cancel the sale of Luhanskteplovoz to Transmashholding, Russia’s largest maker of locomotives and rail equipment, which is owned in part by Makhmudov.

According to Millenium Capital analysts, Privat “seems to be determined to embark on the protracted litigation proceedings to void the privatization sale results.” Mantara Holding is reportedly willing to pay as much as UAH 600mn (about $77 million) for Lukanskteplovoz compared to the UAH 410mn (about $52 million) paid by Transmashholding. In fact, Transmashholding bid only slightly above the original asking price of UAH 400 million when the tender was held in mid-June for a 76.001% stake in the Ukrainian rail-maker.

In Boholybov and Kolomoyskyy’s corner: Serhiy Tihipko, the Deputy Prime Minister for Economic Affairs, who stepped in this week to express concern over the transparency of the Luhanskteplovoz sale. According to Millenium, this may up their chances of taking back the asset from Russian interests.

Yet another round in Ukraine vs. Russia.

Billionaire Post Office

By admin

On Jul 05 2010

In Billionaires

I recently read Mrs. Adams in Winter, a wonderful historical biography that took me on a carriage ride from Russia to France along post roads in 1815 (the upkeep of roads was not for individual travel per se but to ensure swift and efficient mail communiques). Not only were the roads she travelled important in ensuring her safety in a resurgent Napoleonic period, but the stations she passed to get fresh horses and rest said a great deal about the wealth and politics of the land.

History yes. But present as well. Prince Albert von Thurn und Taxi, the billionaire German prince whose fortune Forbes estimates at $2.2 billion, has ties back to these post roads. His diversified family fortune can be traced back to being to general postmasters of the Holy Roman Empire and the postal services in Europe in the 16th century.

The horsepower the billionaire postmaster today uses is race cars not equine. The avid racecar driver took delivery of a Chevrolet Corvette ZR1 last year. Nice one for those old post roads.