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Abu Dhabi, UAETuesday 11 December 2018

Berlusconi bounces back

In our twice-monthly round up of billionaire news, the old fox Silvio Berlusconi proves his resilience while India's richest man Mukesh Ambani is thinking about a major IPO

Silvio Berlusconi has seen his net worth rise 36.9 per cent from November 2016, thanks to a rally in Italian equities. John Thys / AFP
Silvio Berlusconi has seen his net worth rise 36.9 per cent from November 2016, thanks to a rally in Italian equities. John Thys / AFP

Silvio Berliusconi

The tide may be turning for Silvio Berlusconi.

A year ago, the 81-year-old billionaire politician was out of power and locked in battle. Banned from public office after a 2013 conviction for tax fraud, the former four-time prime minister was campaigning against then-prime Minister Matteo Renzi’s proposed reforms while his fortune languished near a five-year low. Then a fight over control of his broadcaster Mediaset broke out with French billionaire Vincent Bollore.

The struggle spurred investor interest in Mediaset, driving up the share price, and Mr Berlusconi got a further political boost last month when his Forza Italia party won a centre-right coalition victory, positioning him for a potential return to power.

With help from a rally in Italian equities, the self-described “most persecuted man in history” has seen his net worth rise 36.9 per cent from Novmber 28, 2016, when Vivendi’s chief content officer touted the company’s possible alliance with Mediaset as a way for European media companies to compete with US rivals.

Mr Berlusconi, who is appealing to the European Court of Human Rights against the ban on holding office, has seen his net worth rise to $8.4 billion, the best performance in the period among the five Italians on the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people.

A spokesman for Mr Berlusconi’s Milan-based investment firm, Fininvest declined to comment on his net worth.

Closely held Fininvest has stakes in media, biotechnology and finance, including his two largest holdings, Banca Mediolanum SpA, which had a total return of 34 per cent since Nov. 28, 2016, and Mediaset, which returned 44.3 per cent. Italian equities are up 41.3 per cent in the same period, despite an economy that’s still struggling with high unemployment, rising poverty and a strained financial system.

Mr Berlusconi, who sold Serie A football team AC Milan to Chinese investors in April for US$788 million, faces a new trial in February, ahead of Italy’s national elections. Last month he was indicted for allegedly bribing a witness to give false testimony about allegations he held “bunga bunga” sex parties. He denies wrongdoing.

“We have been arguing that this was his last time so many times that we must be very careful,” said Giovanni Orsina, a professor of political history at Rome’s Luiss-Guido Carli University. “He’s 81 so I assume this is his last election, but he’s resilient. The odds are to bet against him but I would be very careful with any prophecy regarding the man.”

Mukesh Ambani, chairman and managing director of Reliance Industries, at the Preparing for the Fourth Industrial Revolution session at the World Economic Forum. Valeriano Di Domenico / World Economic Forum
Mukesh Ambani, chairman and managing director of Reliance Industries, at the Preparing for the Fourth Industrial Revolution session at the World Economic Forum. Valeriano Di Domenico / World Economic Forum

Mukesh Ambani

India’s richest man is weighing an initial public offering of mobile operator Reliance Jio Infocomm, people with knowledge of the matter said, after a $31bn investment spree that roiled the country’s wireless market.

Reliance Industries, the conglomerate backed by the tycoon Mukesh Ambani, is holding internal discussions about preparing to list Jio as soon as late 2018 or early 2019, according to the people. Jio, which has not made a profit since its official launch last year, is targeting to improve its financial performance before any share sale, the people said, asking not to be identified because the information is private.

A Jio listing would cap a triumphant return to the Indian wireless market for Mr Ambani, 60, more than a decade after a family feud that led him to cede control of a previous telecom venture to his younger brother. Jio, which is wholly owned by Reliance Industries, launched a free-for-life call service last year that triggered a price war and consolidation in one of the world’s most crowded mobile markets.

“It should get reflected in the current market price level for Reliance,” Deven Choksey, the managing director of KR Choksey Shares & Securities, told Bloomberg Quint.

Jio may achieve a market capitalisation of around $8bn to $11bn through an IPO, according to Arun Kejriwal, the founder of the advisory firm Kejriwal Research & Investment Services Pvt. That valuation assumes the company will be able to reach annual revenue of about $4bn rupees by the time it lists, Mr Kejriwal said.

Mr Ambani has a net worth of nearly $40bn, according to the Bloomberg Billionaires Index. Shares of Reliance Industries, whose operations span refining to retail, have jumped 69 per cent this year to give the company a market value of about $92bn.

Steinhoff chairman Christo Wiese is paying the price for having too much of his financial interests parked in one asset.  Mike Hutchings / Reuters
Steinhoff chairman Christo Wiese is paying the price for having too much of his financial interests parked in one asset. Mike Hutchings / Reuters

Christo Wiese

The spectacular collapse in the share price of Steinhoff International, the world's second-largest furniture retailer after IKEA, is hindering Christo Wiese’s plans to pool his African retail assets.

The South African billionaire has had to pull out of a deal that will give Steinhoff Africa Retail a 23.1 per cent stake and a 50.6 per cent voting interest in Shoprite, the continent’s largest grocery chain. Steinhoff Africa Retail, or Star, is in talks with the manager of pensions for South African civil servants and the company’s black investors about exercising the option to take the stake, it said.

Shares in Steinhoff International have plunged more than 80 per cent since the chief executive Markus Jooste resigned and the Frankfurt-listed company appointed PwC to probe potential accounting irregularities. Mr Wiese, 76, stepped down from his role as chairman of the owner of Mattress Firm in the US and Conforama in France this month to resolve questions over any conflict of interest as the company fights for survival.

Mr Wiese’s net worth has slumped by $4bn to $2bn this year, according to the Bloomberg Billionaire’s Index.

Rupert Murdoch is selling his Hollywood film and television studios as part of a deal with Disney announced on December 14. Adrian Sanchez-Gonzalez / AFP
Rupert Murdoch is selling his Hollywood film and television studios as part of a deal with Disney announced on December 14. Adrian Sanchez-Gonzalez / AFP

Rupert Murdoch

Rupert Murdoch spent a lifetime building an empire that started with a single Australian newspaper into one of the world’s most powerful media companies. A deal with the largest has made him one of the 100 richest people on the planet.

Mr Murdoch had a net worth of about $11bn at the start of November, as news emerged that the Walt Disney was looking to buy some of the entertainment assets of his 21st Century Fox. That added more than $2bn, lifting him to No 92 on the Bloomberg Billionaires Index. His fortune, now $13.8 billiobn, is set to increase by another $2bn when the deal with Disney is completed.

“The value we’re unlocking is plain to see,” Mr Murdoch, 86, said during a call to discuss the $52.4bn deal.

The mogul has been frustrated that the market was undervaluing his media assets and is selling some of the most prized of them, including the Fox film studio, stakes in broadcaster Sky and streaming video service Hulu, as well as cable channels that include National Geographic and FX.

Mr Murdoch controls a 16.8 per cent economic interest in Fox, which he holds through family trusts. The family’s Disney shares would be worth more than $9bn at the current share price.

His interest in Fox today is worth $10.3bn. The assets he is keeping, including Fox News, Fox Business, FS1 and the Fox broadcast network, will have a value of $11 to $12 a share, according to a person familiar with the matter. At the low end of that range the stake could be worth $3.4bn, making the value of both stakes $2bn higher than it is today.

“Rupert Murdoch will come out richer in the long run,” said Hal Vogel, an analyst and author of Entertainment Industry Economics: A Guide for Financial Analysis. “He’ll have a percentage of a Disney that’s a much stronger company with these Fox assets and he’ll grow his net worth faster if he owns them through Disney than if owns them himself. That’s why he’s so smart.”

Steve Cohen

With just days until regulators permit billionaire Steve Cohen to resume taking investor money, his new hedge fund plans are making some potential clients wary.

The terms being discussed for Mr Cohen’s new fund - which he could launch as soon as January 1, when his ban on trading outside money expires - include locking up capital for one to three years, according to people familiar with the matter. During that time, regardless of how the fund performs, clients won’t be able to withdraw their money without paying an additional fee, said the people, who asked to not be identified because the information isn’t public.

Mr Cohen himself will get more flexible terms, two of the people said. It’s a juxtaposition some potential investors have called onerous, and it’s sparking concern over whether investing in the highly anticipated fund will be worth the liquidity risk.

Mr Cohen, 61, has also further revised his fundraising target for Stamford Harbor Capital to $3bn to $4bn, two of the people said. He was said to be targeting $2bn to $5bn in October, down from the $10bn upper end he was anticipating earlier this year. The terms of the expected fund are fluid and may still change.

Jonathan Gasthalter, a spokesman for Mr Cohen and Stamford Harbor, declined to comment.

Mr Cohen, whose net worth is estimated at $12.1bn by the Bloomberg Billionaires' Index, since then has been managing his fortune through his family office, Point72 Asset Management. The firm produced a return of at least 10 per cent this year through November after expenses, one of the people said. That’s a turnaround from 2016, when Point72 gained just 1 per cent, Mr Cohen’s second-worst annual performance ever.

Frank Lowy

After spending more than half a century building a global shopping mall empire with properties stretching from London to San Francisco, the Australian tycoon Frank Lowy is letting go of the business that made him a billionaire.

The 87-year-old co-founder of Westfield said this month he and his sons will focus on managing investments instead of running shopping centres after agreeing to sell the mall operator to Paris-based Unibail-Rodamco for $15.8bn - the biggest deal in real estate since 2013.

It’s the end of an era for Mr Lowy, a Holocaust survivor who earned his fortune by opening malls across the world, beginning with one in western Sydney in 1959. His family’s decision to reduce exposure to shopping centres comes as the industry tries to reinvent itself to survive the surge in online retailing.

"It’s kind of bittersweet for me at the moment," Mr Lowy said. "I’m not looking for too much time to spare, but the workload will be totally different, and it will encompass investing rather than managing."

His 9.5 per cent stake in Westfield makes up about a quarter of Mr Lowy’s $5.1bn fortune, according to the Bloomberg Billionaires Index.

Known for its vast, multi-level mega malls, Westfield operates the kind of retail outlets that are most likely to keep drawing consumers as a boom in Web retailers like Amazon.com prompts smaller competitors to shut down. Unibail-Rodamco, an owner of malls, offices and convention centres, offered $7.57 per share for Westfield, about 18 per cent more than its closing price before the deal.

Westfield, which operates 35 malls in the U.S. and UK, is the biggest private sector mall landlord in London and its U.S. shopping centers provide almost 70 per cent of its $1.8bn annual revenue.

"It’s a lifetime, more than a lifetime, of work that I’ve put into this company," Mr Lowy said. "It’s time from my personal point of view for me to move on."

Cameron and Tyler Winklevoss

Cameron and Tyler Winklevoss, thought to be among the largest holders of bitcoin, said the advent of futures is just the beginning of a phase of greater acceptance for the cryptocurrency that is often derided as a bubble.

“We think it’s the starting gun to a whole new phase of liquidity and price discovery and sophisticated entrance to the market,” Tyler Winklevoss said this month.

The Winklevoss twins are co-founders of the Gemini exchange, which Cboe Global Markets Inc. is using as the basis for the daily settlement for the bitcoin futures that began trading this week.

The Winklevoss brothers said in 2013 that they owned almost $11m worth of bitcoins. If they retained that stake it would be valued at about $950mtoday, according to the Bloomberg Billionaires Index. The ranking calculates they each have a $1.1bn fortune as of December 6 after taking into account other assets.

Cameron Winklevoss predicted it will rise as much as 20-fold as investors come to view it as an upgrade to gold.

“We think bitcoin is like gold 2.0,” Tyler Winklevoss said. “So whatever your reasons for investing in gold - whether it’s scarce, durability, portability, fungibility - we think that bitcoin matches or beats gold across the board.”

Mark Shuttleworth

He’s best known for being the world’s first “Afronaut,” but since returning to Earth from his 2002 trip on Russia’s Soyuz TM-34 rocket ship, Cape Town native Mark Shuttleworth set about with the conquest of a much more lucrative universe: the internet-of-things.

Mr Shuttleworth created Ubuntu, an open-source Linux operating system that helps connect everything from drones to thermostats to the internet. His company, Canonical Group Ltd., makes money from about 800 paying customers, including Netflix, Tesla and Deutsche Telekom, which pay for support services. Its success has helped boost his net worth to $1bn, according to the Bloomberg Billionaires Index.

“It’s destructive to be too focused on that,” Mr Shuttleworth, 44, said of his wealth. “It’s just a distraction from whether you have your finger on the pulse of what’s next.”

In 1996, he started Thawte Consulting, which quickly became one the largest online providers of digital certificates, which are used to help prove that websites are legitimate. In 2000, he sold Thawte to VeriSign for $575m in stock. He cashed out the shares ahead of the dotcom bust, probably making more than $700m, according to data compiled by Bloomberg.

Flush with cash and nurturing a lifelong fascination with the cosmos, Mr Shuttleworth became the second person, after the Wilshire Associates founder Dennis Tito, to pay Russia $20m for a ticket to space. He trained for a year in Russia and with the National Aeronautics and Space Administration to qualify as one of three crew members on a mission to the International Space Station in 2002.

Back on Earth, he formed an Africa-focused technology venture capital arm, HBD, relocated to tax-friendly Isle of Man and funded a foundation that provides grants to idealistic entrepreneurs. In 2004, he started programming Ubuntu as an open-source project and formed Canonical to explore business prospects arising from it.

“It gave me the luxury of being able to focus on the things I thought were really meaningful and interesting and deep,” Mr Shuttleworth said. “Open-source software is deep. You have to get under the hood a little bit, then you realise it is everywhere. It is defining innovation today.”

Mr Shuttleworth, who remains the Canonical ’s sole owner, said he aims to take it public within five years.

“The vision for Canonical is to provide the platform that you see everywhere other than the personal domain. We won’t make a dent in phone or PCs. But pretty much your entire data center runs Linux and every other thing in the room is running Linux,” Mr Shuttleworth said.

“Can we help deliver that innovation and do it in a format that is secure, reliable and very, very cheap? That’s an interesting set of challenges.”