One winner, one loser in Ofer brothers’ billionaire lottery
WHEN Israel’s richest man died in 2011, the task of splitting his vast fortune came down to a simple lottery with just two tickets – both jackpots with billion- dollar payouts. After outside managers divvied up shipping magnate Sammy Ofer’s hundreds of tankers, container carriers, and other cargo vessels into two groups of equal value, sons Idan and Eyal each picked one out of a hat as their mother looked on.
“We literally reached in and grabbed an envelope,” says the younger brother, Idan, 61. “And that’s it. It was peaceful, no drama.”
They did something similar with paintings by Picasso and Van Gogh and the rest of their father’s art collection. Other family assets – real estate, bank shares, a stake in Israel’s biggest chemical company – were evenly divided based on the brothers’ involvement in the various businesses.
Eyal, 66, took over Sammy’s stakes in Israel’s Mizrahi Tefahot Bank, property developer Melisron, real estate around the world, and a stake in Royal Caribbean Cruises. Idan got control of Israel’s largest public holding company and various tech investments.
In terms of carving up colossal wealth, the Ofers did things as smoothly as possible. The brothers need look no further than their cousins Liora and Doron Ofer, the children of Sammy’s brother Yuli, to see how inheritance disputes can tear a family asunder. Those siblings are no longer on speaking terms after a legal squabble over Yuli’s stake in an investment company. Liora today controls assets valued at US$ 2.3 billion ( RM10.4 billion), while Doron’s share is US$ 675 million, according to Bloomberg index calculations.
Liora Ofer declined to comment for the story and Doron Ofer didn’t respond to requests for comment. Eyal declined to be interviewed.
Bad luck and differing appetites for risk, though, have turned Idan and Eyal’s equitable split into fortunes as lopsided as their cousins’. Idan’s bank balance has been battered by a commodities slump, ill-timed investment bets, and increased scrutiny in Israel. Eyal, by contrast, has added to his wealth with office buildings and hotels across the US and Europe.
When the split was finalised in 2013, both brothers were worth more than US$ 6 billion. Idan’s stash has since dropped to US$ 3 billion while the fortune of Eyal has grown to US$ 8.6 billion, according to the Bloomberg Billionaires Index.
Tracking the value of his portfolio “doesn’t make me happy,” Idan says, munching chocolate- covered rice cakes in his bright corner office in London’s Mayfair neighbourhood, where a large black- and-white photo of his bespectacled father peers over his shoulder. “But I’m used to it. And I’m not a speculator. Having a background in shipping makes me comfortable with cyclical things.”
The brothers were born in Israel, then attended boarding school in Britain before returning home to fulfil their military service. After studying maritime law in London, Eyal worked alongside his father to expand the family’s cargo shipping business. Idan, a 1982 graduate of the University of Haifa, chafed at the idea of sharing what he calls the “same small office” with his dad. He instead moved to Hong Kong and expanded the group into tankers.
After a decade in Asia and a couple of years in New York, Idan was drawn back home. The family that owned a giant holding group called Israel Corp. was feuding and wanted to cash out. In 1999, the Ofers paid US$ 330 million for a controlling interest in the company and Idan was appointed chairman. His homecoming was a coronation for the new prince of Israeli industry.
That investment stands at the root of Idan’s declines. He now controls Israel Corp., whose primary asset is fertiliser giant Israel Chemicals.
In 2011, middle- class Israelis took to the streets of Tel Aviv and other cities to protest the rising cost of living, often blaming the country’s business elite — sometimes singling out Idan – for their woes.
In turn, the government hiked taxes on ICL’s domestic profits and considered stripping the company of potash mines it operates near the Dead Sea.
When Idan in 2012 sought to sell ICL to Potash Corp. for US$ 13.5 billion, Israeli law makers torpedoed the deal, saying it was against the national interest. As the price of potash, ICL’s most profitable product, has tumbled about 75 per cent in the past eight years, the family’s stake in Israel Corp. – now controlled by Idan – has fallen below US$ 1 billion, from US$ 6.5 billion in 2008.
Eyal, meanwhile, has lived abroad since the 1970s and long ago minimised his role in Israel Corp., thereby skirting the tumult Idan faced. Over the years, he quietly assembled a real estate empire, starting with distressed properties on Park Avenue South in Manhattan. His deep knowledge of ships meant he was comfortable with similarly tangible (if less moveable) assets like buildings. By 1990, he’d bought and sold more than 30 of them. — WP-Bloomberg