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Abu Dhabi, UAEMonday 17 December 2018

Hatchimals craze hatches brand new pair of billionaires 

In our bi-weekly roundup on what the world's mega rich are up to, the toy industry has created two Canadian billionaires while Tom Barrack is after the ultimate distressed asset in Hollywood - Weinstein's former movie studio

Childhood pals Ronnen Harary (right) and Anton Rabie (left) each own about 30 per cent of Spin Master Corporation, the company behind Hatchimals. Photo: Getty Images
Childhood pals Ronnen Harary (right) and Anton Rabie (left) each own about 30 per cent of Spin Master Corporation, the company behind Hatchimals. Photo: Getty Images

Ronnen Harary and Anton Rabie

The popularity of furry toys that peck their way out of plastic eggs has hatched a pair of Canadian billionaires.

Childhood friends Ronnen Harary and Anton Rabie each own about 30 per cent of Spin Master Corporation, the company behind Hatchimals that they co-founded in 1994. Shares of Toronto-based Spin Master have surged 56 per cent this year, giving the duo each a net worth of US$1.4 billion, according to the Bloomberg Billionaires Index.

Spin Master declined to comment, citing the so-called quiet period that precedes the release of its third-quarter results, scheduled for November 7.

The blockbuster success of Hatchimals fuelled a quadrupling of sales in Spin Master’s remote control and interactive characters segment, helping make it one of the world’s fastest-growing toymakers.

Its market capitalization is now on par with Mattel, which has tumbled 43 per cent this year after a lacklustre holiday season and declining sales of Barbie dolls, its biggest property. Spin Master had revenue of $1.2bn in 2016 compared with $5.5bn for Mattel.

The rise of Spin Master, which also makes Meccano construction sets and Etch A Sketch, puts Harary and Rabie among a select group of billionaire toymakers, including Alan Hassenfeld, the grandson of Hasbro’s co-founder, and four members of the Kristiansen family, whose ancestor Ole Kirk Kristiansen created Lego in 1932.

The Kristiansens have the world’s largest toy fortune, most of it derived from their 75 per cent control of Lego A/S. The Danish company had revenue of 37.9bn Danish kroner ($6bn) in 2016 and is valued at $22bn by the Bloomberg index. Hasbro shares have climbed 24 per cent this year, driven by the success of its digital products, and made Hassenfeld a billionaire.

Tom Barrack is the chief executive of Colony Capital. The firm may have to rethink its Abraaj strategy. AFP
Tom Barrack is the chief executive of Colony Capital. The firm may have to rethink its Abraaj strategy. AFP

Tom Barrack

Billionaire investor Tom Barrack is circling the ultimate distressed asset in Hollywood: the movie studio co-founded by Harvey Weinstein.

Barrack’s private investment firm, Colony Capital, is offering The Weinstein Company a financial lifeline as the studio reels from the widening scandals surrounding its co-founder, who knows the billionaire from a previous deal. In a brief statement Monday, The Weinstein Company said Colony might end up buying its assets.

The small studio, known for award-winners such as “The Artist” and TV shows such as “Project Runway,” has been plunged into crisis by allegations of rape and sexual harassment against Weinstein going back to the 1990s. Weinstein, one of Hollywood’s most powerful figures, has denied the rape allegations while acknowledging his behaviour “caused a lot of pain".

Mr Barrack, a close friend of President Donald Trump, made his fortune in real estate but has a history of plucking distressed assets from the entertainment industry. Colony Capital took over Michael Jackson’s Neverland estate in 2008 for $23.5 million in debt, averting foreclosure, and saved photographer Annie Leibovitz from bankruptcy by buying out her $24 million of debt. And Colony was part of a group that acquired Harvey Weinstein’s former company, Miramax, in 2010 from Walt Disney Company for $660m.

Mr Barrack, 70, has a net worth of $1.3bn, according to the Bloomberg Billionaire’sIndex. He was chairman of Trump’s inaugural committee, which lends his talks with The Weinstein Company a certain irony - a deal could financially benefit Harvey Weinstein, who was a longtime Democratic donor who backed Trump’s opponent Hillary Clinton in the 2016 presidential race.

“We will help return the company to its rightful iconic position in the independent film and television industry,” Mr Barrack said in a statement on Monday. Colony agreed to immediately provide cash to the film studio. No other details of the talks were disclosed.

Indian industrialist and Reliance chief executive Anil Ambani. Punit Paranje / AFP
Indian industrialist and Reliance chief executive Anil Ambani. Punit Paranje / AFP

Anil Ambani

With Anil Ambani’s telecom unit battling insolvency proceedings, the Indian billionaire found a target to blame for some of its woes at a recent shareholder meeting: Shailesh Mehta, a 71-year-old investor who holds just 10 shares in the indebted company.

Addressing the hall, Mr Ambani said Mr Mehta had cost banks and other shareholders by challenging, in the Bombay High Court, Reliance Communications' attempt to merge with another telecom operator, Sistema Shyam Teleservices.

Mr Ambani’s frustration with the activist is understandable. Until recently, minority shareholders in India rarely clashed with management and individual investors were more likely to use meetings to recite poetry and sing the praises of the nation’s industrialist families.

But Mr Mehta’s ilk is growing as retail investors channel more savings into the stock market, especially via mutual funds, or through insurance and pension providers, which are being forced by regulators to take a more active role in corporate governance.

“Earlier, the only option an investor had was to sell if they have a difference in opinion with the management,” said Amit Tandon, founder of proxy advisory firm Institutional Investor Advisory Services. “Now, investors have an option of voicing their concerns too. Companies are now disclosing far more details in anticipation of minority shareholder demands.”

In June, small shareholders of garments manufacturer Raymond voted down a plan to sell at a substantial discount apartments developed on the company’s property to entities related to the founder’s group and Chairman Gautam Singhania. A month later, fund manager Unifi Capital tried to get a seat on the board of drugmaker Alembic to represent small shareholders, using a provision in the Companies Act. for the first time, according to a BloombergQuint report. The attempt failed but highlighted a right small shareholders haven’t before exercised.

At the RCom meeting in September, Mr Mehta said he had to force his way in and struggled to get to speak at the podium. When he started talking, Mr Ambani told him he was not welcome and read out extracts from the high court judgement in October 2016, which had dismissed Mehta’s objections, calling some of them frivolous.

“I don’t invest in shares anymore because I have lost faith, as companies don’t work in the interest of shareholders,” Mr Mehta said by phone from Mumbai. “There may be regulations but there is no effective mechanism to implement the regulations and there is no accountability with the financial institutions and the companies."

RCom spokesman declined to comment and shared instead a part of the court judgement.

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He Qiaonv

Earlier this month He Qiaonv announced the first step in a $1.5bn plan that may represent the largest-ever personal philanthropic commitment to wildlife conservation.

The number was not the only thing that was surprising about the announcement in Monaco. The source might equally raise eyebrows: The donation is not coming from a known Western conservationist like Paul Allen, but from a landscape planner-turned-environmental steward who’s based in Beijing.

Ms He represents a new wave of self-made Chinese philanthropists unafraid to spend; her seven-year pledge stands at more than a third of her current $3.6 billion net worth, according to the Bloomberg Billionaires Index.

“[China is] pivoting to a new narrative in record speed,” said Tom Kaplan, founder and chairman of Panthera, the leading wild cat conservation organisation and Ms He’s first international partner. “Their [global] reputation has suffered by being viewed as the scourge of the elephant and tiger—and they want to reverse this.”

As part of their partnership, Ms He’s namesake Beijing Qiaonv Foundation (BQF) is pledging $20m toward Chinese snow leopard and other projects at Panthera—significant for an organisation whose annual operating budget hovers around $14m. And doubly significant given that threatened cats in China had yet to be put under such a bright spotlight as, say, lions in Africa.

With the emergence of Chinese leadership in this area, Mr Kaplan says Qiaonv’s pledge stands to change the face of cat conservation forever. “One day this event may be seen as a watershed.”

In China, domestic private conservation work still requires the collaboration of the government, as private landownership—and therefore, privately managed nature reserves - are not allowed under Chinese law. But under Xi Jinping’s leadership, these private-public partnerships are becoming possible.

Ms He agrees that the collaboration of China’s ultra-rich with their government marks a turning point for the country. “The public awareness of environmental protection is gradually increasing in China,” she said.

Her affinity for the environment is what drove her into landscaping and resource management in the first place. But her vision for how she could contribute toward the greater good of the planet has evolved over time.

“At the very beginning, the dream of our business was to build 100 of the most beautiful parks in 100 cities of China,” she said of Beijing Orient Landscape, the company she built from scratch and continues to oversee as chairman. What she found along the way were polluted water systems and depleted urban ecology.

In 2012 she founded Beijing Qiaonv Foundation with the goal of resolving some of the world’s most pressing environmental issues. Among her priorities were establishing key conservation areas within her home country; identifying native species in the greatest need of protection; and lobbying the government, partnering with international organizations, and supporting domestic NGOs to create meaningful change that could impact global biodiversity and carbon dioxide levels.

As Ms He put it: “We believe that protecting China is to protect the whole Earth.”