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Abu Dhabi, UAESunday 21 October 2018

The billionaire personal trainer sweating his way to an even bigger fortune

Round up on the world's wealthy: At 57, Technogym's Nerio Alessandri can easily demonstrate his own equipment while British Brexiteer Anthony Bamford has rejoined the rich list amid a building boom

Nerio Alessandri is the founder and chief executive of the Italian sport equipment firm Technogym. Photo: AFP
Nerio Alessandri is the founder and chief executive of the Italian sport equipment firm Technogym. Photo: AFP

Nerio Alessandri

Nerio Alessandri is moonlighting as the world’s wealthiest - and perhaps best dressed - personal trainer.

Sporting a blue blazer and chinos, the billionaire founder and chief executive officer of Technogym SpA is demonstrating his company’s top-of-the-line Kinesis Personal Vision machine, whose sleek combination of aluminum alloy arms, cables and polished steel panels allows users to perform more than 200 exercises.

Mr Alessandri, 57, makes it look easy, while others struggle around him.

The company’s gleaming headquarters in Cesena - a city near the Adriatic Sea and about an hour’s drive from Bologna - reflects the world’s booming healthy-living economy. Largely the preserve of bodybuilders in the 1980s, it’s now part of mainstream culture, with boutique gyms, cycling studios and yoga classes an inescapable part of modern life.

It’s big business. The fitness and mind-body industry was worth $542bn in 2015, according to the Global Wellness Institute. Lululemon Athletica founder Chip Wilson now ranks among the world’s 500 richest people, while startup Peloton Interactive has scored a $4bn valuation thanks to the popularity of its internet-connected home-fitness equipment.

Mr Alessandri is a godfather of this new economy.

Thirty-five years after he built his first piece of equipment - a hack-squat machine - in his father’s garage, his focus on fitness has made him a billionaire. His stake in Technogym, whose shares have surged 46 per cent in the past year, comprises about three quarters of his $1.3bn fortune, according to the Bloomberg Billionaires Index.

Still, Technogym can’t afford to take a breather. There’s a constant need to innovate to justify its premium prices, and new competitors abound. In an online world, the hottest workout products are as much about the content they provide and communities they host.

However, Mr Alessandri says his company is well-positioned to prosper.

“Wellness means feeling good,” he says. “Wellness is the lifestyle born 2,000 years ago in Italy during the Roman era. Mens sana in corpore sano. A healthy mind in a healthy body.”

He practices what he preaches. His own home is dotted with workout machines, including one in the middle of his library. Technogym’s Cesena campus, all curved roofs and wood interiors - plus a small army of robotic lawn mowers - is a cathedral to this vision.

It certainly stands out from the fields of peach trees and low-slung warehouses that mark the drive from Bologna. That’s helpful because it’s a marketing tool, too. More than 25,000 visitors pass through each year, touring the two-floor gym where 1,000 employees are encouraged to work out daily on its dozens of treadmills, stationary bikes and weight machines.

Mr Alessandri has a parent’s expectations for Technogym’s future.

“I have two children and Technogym is the third,” he said. “The only things I want from my kids is health, growth and eternity.”

Anthony Bamford is the chairman of JCB, a role he has held since 1975. Alamy
Anthony Bamford is the chairman of JCB, a role he has held since 1975. Alamy

Anthony Bamford

Anthony Bamford, the Brexit-backing chair of JCB Service, has rejoined the ranks of the planet’s 500 richest people as a global construction boom bolsters demand for his company’s excavation products.

Mr Bamford’s wealth rose $620 million (Dh2,277) to $4.4 billion after JCB released its 2017 results this week. Revenue for the world’s largest privately owned construction equipment maker grew 28 per cent from the previous year to £3.4bn. The Rocester, England-based business paid a £60m dividend to the Bamford family after skipping one the prior year.

Mr Bamford’s fortune makes him the world’s 417th richest, according to the Bloomberg Billionaires Index. The 72-year-old last appeared on the list in June.

JCB’s latest results mark its largest revenue growth in five years and outstrip the global construction equipment market’s expected 4 per cent expansion rate through to 2024. Rising government funding for public infrastructure projects and “rapid” urbanisation across countries including China, Brazil and India underpin this growth, according to research and consulting firm Global Market Insight.

In June 2016, Mr Bamford wrote to JCB’s UK staff and criticised the European Union’s “unaccountable" leaders before informing employees he would vote to leave in the country’s referendum later that month.

The company’s growth since the EU referendum contrasts with Britain’s economic outlook. The British Chamber of Commerce cut its economic forecast this month, partly due to Brexit-related uncertainty. Bank of England Governor Mark Carney has warned that borrowing costs may rise even as economic output falls if the UK fails to gets a post-Brexit EU trade deal.

While JCB continues to invest in the UK, it’s taking an active interest in the country’s post-Brexit international trade. Last month, JCB formed part of a business delegation accompanying Prime Minister Theresa May’s trip to boost trade relations with South Africa, Nigeria and Kenya.

Rinat Akhmetov, the richest man in Ukraine, has climbed back after his wealth was destroyed by war. Photo; AFP 
Rinat Akhmetov, the richest man in Ukraine, has climbed back after his wealth was destroyed by war. Photo; AFP 

Rinat Akhmetov

Rinat Akhmetov has survived revolution, war and nationalisation of assets. His fortune has dropped almost four times from its highest level in 2013 after a revolution in Ukraine erupted into conflict with Russia and the annexation of Crimea.

Yet he continues to be Ukraine’s richest person and the 52-year-old is even making a comeback with a fortune of $5.9bn, according to the Bloomberg Billionaires Index.

Mr Akhmetov owns System Capital Management, the country’s largest industrial conglomerate, whose most valuable assets are steel company Metinvest, and DTEK, a coal and energy business. Both had enterprises in Lugansk and Donetsk regions, where an uprising of pro-Russian rebels occurred after mass protests in early 2014.

Mr Akhmetov, an avid supporter of former President Viktor Yanukovych, was forced to move from his native Donetsk to Kiev and his wealth slid from a high of $22.4bn in January 2013.

In early 2017, Metinvest and DTEK assets in Lugansk and Donetsk were nationalised by pro-Russian rebels after Ukraine’s military veterans started a transport blockade of its rebel-held eastern regions. Mr Akhmetov stayed afloat and Metinvest reported stronger first half 2018 financial results compared with the same period in 2017.

DTEK’s coal production decreased 12.9 per cent during the same period. However, efforts to convert some of its power units from anthracite - unavailable in Ukraine since the transport blockade - to hard coal are showing results and allowing the holding to decrease its coal import needs, according to Concorde Capital’s Alexander Paraschiy. The company is also targeting $1.1bn for renewables by 2020.

Kevin Systrom and his Instagram co-founders Mike Krieger announced they were leaving the photo-sharing app bought by Facebook six years ago last month. Photo: AFP
Kevin Systrom and his Instagram co-founders Mike Krieger announced they were leaving the photo-sharing app bought by Facebook six years ago last month. Photo: AFP

Kevin Systrom

While he took time off for paternity leave this month, Instagram’s Kevin Systrom had time to reflect on all the small ways Facebook had started to impose its will on the photo-sharing app he co-founded.

Earlier this year, his parent company asked for prompts within Instagram that would drive traffic and add content to its main social network. Meanwhile, Facebook removed some of the links to download Instagram from the Facebook app, people familiar with the matter said. Facebook also wanted more influence over Instagram’s functions such as ad sales, reducing the potential for growth in the app’s own staff in the coming year. Then, in July, chief executive Mark Zuckerberg seemed to take credit for Instagram’s success on the company’s earnings call.

Mr Systrom and his co-founder, Mike Krieger, had spent six years running Instagram as a division of Facebook, while pursuing their own vision for the app - even when that was sometimes at odds with Mr Zuckerberg’s ideas. Lately Facebook had become relentless in its pushes for data sharing, product integrations and other moves that would benefit the overall company, said the people, who asked not to be named discussing internal dynamics. When Mr Systrom came back from leave this week, he and Mr Krieger abruptly announced that they were leaving the social media giant. Facebook was not prepared for the news.

“Building new things requires that we step back, understand what inspires us and match that with what the world needs,” Mr Systrom wrote, without mentioning Mr Zuckerberg. “We look forward to watching what these innovative and extraordinary companies do next.”

He used the plural - “companies” - even though without him and Mr Krieger, Instagram will most likely start to become less of a separate entity. The founders’ exit clears the way for Mr Zuckerberg to achieve his vision for cross-promotion among what he calls a “family of apps,” the group that encompasses Facebook, WhatsApp, Instagram and Messenger.

David Siegel, co-founder of Two Sigma Investments. Photo: Bloomberg
David Siegel, co-founder of Two Sigma Investments. Photo: Bloomberg

David Siegel and John Overdeck

Billionaires David Siegel and John Overdeck are reviving a little known asset-backed security that boosts potential risks and rewards of investing in private equity funds.

The duo, co-chairmen of the $52bn hedge fund Two Sigma, are using a collateralised fund obligation (CFO) at Sightway Capital, which invests part of their fortune. The CFO raised $216m through a securitised note sale last month, according to the company. The notes will be repaid by the cash flows from stakes in 32 private equity funds.

The CFO adds leverage to Sightway’s private equity fund holdings, increasing the volatility while freeing up cash for other investments. Hedge funds and private equity firms have been increasingly using a similar technique to finance loans to leveraged corporations, packaging the debt into collateralised loan obligations.

“It’s the same thing that leverage has done since Egyptian times,” says Franklin Rudd, a partner at Compass Partners International, a private equity investor. “It takes an asset that people assume is low risk because it’s diversified and allows you to borrow against it. But when markets turn around, everything goes down.”

Wray Thorn, Sightway’s chief investment officer, said his firm has anticipated the possibility of such a slump. Sightway relied on mathematical models and other technology developed at Two Sigma to better understand how the securitised bonds would perform in a market downturn. The results helped the notes earn an A rating from Fitch, lowering the cost of financing for Sightway.

“This is a really great example of how you can use data science and modeling techniques to innovate the way private equity is done,” Mr Thorn says. “We believe in this instance, it resulted in a better outcome both for the issuer and the investors.”

Sightway, which had about $1.3bn in assets under management in March, was formed to help Two Sigma’s founders and other employees diversify into private equity. The New York-based firm makes direct investments and also allocates capital to outside fund managers, primarily focusing on real assets such as agriculture, timber, energy and mining.