Wealthy people who have control over many other lives
From electric vehicles to fine art to sport: our fortnightly round-up of the fortunes of the world’s billionaires
UDAY KOTAK
For India, it is a US$207 billion mess, a pile-up of bad loan years in the making that is dragging on growth. For the nation’s wealthiest banker, it’s the kind of opportunity that rarely presents itself.
What has billionaire Uday Kotak salivating is the government’s attempt to finally draw a line under delinquent loans, with recent steps to overhaul India’s bankruptcy laws and recapitalise stateowned banks. The moves are intended to lift a burden from the country’s banks and encourage them to accelerate lending, supporting economic growth.
Over the next year, the assets and debts of about 50 of India’s biggest defaulters may be sold off by court-appointed professionals in a process in which banks are expected to take deep haircuts on their loans. The companies’ borrowings total an estimated 3 trillion rupees (Dh170.7 billlion), close to one-third of total recognised bad loans in India’s banking system.
“The whole insolvency and bankruptcy process is a oncein-a-lifetime event,” said Mr Kotak, the managing director of Kotak Mahindra Bank. “Through this you could actually get assets that would give disproportionate returns for long periods of time.”
Funds controlled by Kotak Mahindra are looking at deals involving the assets and debts of some of the first 12 companies going through the bankruptcy courts, Mr Kotak said. Industries including steel are of particular interest, according to the banker. Pricing of assets put up for sale should become clearer by the end of the first quarter, he said.
Banks are likely to face losses of up to 60 per cent on their loans to the companies headed for bankruptcy courts, according to Mr Kotak.
Sovereign wealth funds from the Middle East and South East Asia, along with several global pension funds, have also expressed interest, he said. He did not name the funds.
“India is now as open and transparent as you can get anywhere else in the world. The rules of the game are very clear,” Mr Kotak said. “There is no bias against or for foreign players versus the Indian ones” except in a small number of sectors where foreign ownership is capped by the government, he added.
Mr Kotak, whose $10.2bn fortune makes him the seventh richest person in India and the wealthiest banker in Asia according to the Bloomberg Billionaires Index, said the government’s move to resolve the bad debt crisis is a watershed moment for his country.
“For the first time, founders fear losing control of the company if dues are not paid,” he added.
VLADIMIR POTANIN
There are two major reasons the mining billionaire Vladimir Potanin is within a hair’s breadth of regaining his ranking as Russia’s richest tycoon this year.
One is higher prices for nickel used in batteries as metals traders bet electric vehicles are the future of transportation. The other is a jump in palladium on wagers that petrol cars will be here for a long time yet.
They have boosted the value of Mr Potanin’s 30 per cent in MMC Norilsk Nickel, the top miner of both metals, lifting his net worth 12 per cent this
year to $19bn. They also show how Nornickel, as it is known, will gain from auto industry changes even if optimism on electric cars is overdone.
Palladium, used to cut pollution in petrol and hybrid electric vehicles, is up 47 per cent this year in the best performance of any major metal as buyers turn away from dirtier diesel-powered cars after an industry scandal on emissions testing. Nickel climbed 16 per cent in the period.
“Development of the electric vehicle industry will lead to increasing demand for nickel and cobalt, but it won’t happen that fast,” Mr Potanin said. “Demand for palladium won’t fall as there will still be a lot of gasoline-powered cars.”
Nornickel shares have risen 27 per cent in the past six months, increasing Potanin’s wealth to just $100 million less than aluminum tycoon Alexey Mordashov, Russia’s richest man, according to estimates by the Bloomberg Billionaires Index.
The company controls 40 per cent of the world market for palladium, mostly used in auto catalysts to cut pollution from petrol-fuelled cars.
It also dominates nickel output and is Russia’s biggest producer of copper.
Demand for nickel from the electric car market may grow to as much as 400,000 tonnes in 2025 from just 20,000 tonnes, Nornickel says. That adds to existing demand for nickel from stainless steel makers, the biggest users of the metal.
The company signed a deal with BASF this year to experiment with boosting its sales of metals to battery producers.
“This will be a test project and, if successful, we may start production of industrially important amounts by 2020,” Mr Potanin said.
DAVID ROCKEFELLER
Art collectors in Asia have had the first look at masterpieces from the late billionaire David Rockefeller’s trove – including works by Pablo Picasso and Claude Monet – which will be sold at auction next year.
Christie’s unveiled highlights of the vast collection of Peggy and David Rockefeller this weekend in Hong Kong, according to the auction house.
“It’s the first time we’ll launch a collection in Hong Kong,” said Marc Porter, Christie’s chairman in the Americas. “We think Hong Kong is the best place to unveil it because of the density of collectors in Asia and the number of collectors in impressionist and modern art in the region.”
The works will be on view at the Hong Kong Convention Centre until tomorrow.
The collection launch after Christie’s had a $1.4bn week of sales in New York, where Asian clients were particularly active during the impressionist and modern art evening auction, buying one-third of the lots, Mr Porter said.
A landscape by Vincent Van Gogh, which sold for $81.3m, went to a client of Rebecca Wei, president of Christie’s Asia. Another reason for the Asia focus: there are now more billionaires in Asia than in the United States.
Rockefeller’s estate is selling more than 2,000 objects, including modern art masterpieces, Chinese export porcelain, American paintings and European furniture. Prices will start at $200 and the proceeds will benefit selected charities. Christie’s has not revealed the estimated value of the entire collection. Twenty-three lots from the collection will be shown in Hong Kong.
MICHAEL RUBIN
Fanatics has crushed the competition in the US sports merchandise industry by selling fans things they didn’t realise they needed, like a $40 New York Yankees money clip or a $50 Green Bay Packers bikini.
Now, armed with a $1bn investment from SoftBank Group’s Masayoshi Son, fellow billionaire Michael Rubin aims to tackle a tougher challenge: sparking an American-style hunger for sports team gear in fans from Bristol to Beijing.
Fanatics, based in Florida, has exclusive licensing deals with everything from Nascar to the National Football League, plus English Premier League football teams such as Manchester United and Manchester City.
It pairs those with a fast-fashion-inspired logistical operation that lets it sell shirts and caps celebrating on-field achievements mere minutes after the action ends.
That attracted the attention of Mr Son, who is betting that the American way of buying sports merchandise gains more favour overseas than American sports themselves. Mr Rubin is already pretty flush himself, having sold sports gear startup GSI Commerce to eBay for $2.4bn in 2011, but he is thinking bigger: Fanatics is targeting markets such as the United Kingdom and China in its aim to quintuple annual sales to $10bn over the next five years. The global market is worth $25.3bn, according to the International Licensing Industry Merchandisers’ Association.
Selling sports gear to fans means rubbing up against entrenched cultural norms and, in China’s case, the economic ambitions of a global powerhouse.
While Fanatics’ international sales amount to about $200m, Steve Davis, the company’s newly appointed international head, expects business outside the US to make up about half of the company’s $10bn target. He plans to open manufacturing facilities in Germany and China next year, then in Japan and Australia in 2019.