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The mega-rich just keep getting richer

3 Jan 2013 SYDNEY MORNING HERALD
BY MATTHEW MILLER AND PETER NEWCOMB


But the two Australians in the top 100 had mixed fortunes, write Matthew Miller and Peter Newcomb.

The world's 100 richest people got even richer last year, building their collective wealth to $US1.9 trillion [$1.8 trillion].

But the fortunes of the two Australians to make the cut - Gina Rinehart and expat Rupert Murdoch - were mixed.

Rinehart, Australia's richest person, dropped one rung to rank 39th on the Bloomberg Billionaires Index, with her $US18.6 billion fortune falling 8 per cent, or $US1.6 billion - partly due to softer iron ore prices last year, and partly due to losing investments in media companies including Ten Network and Fairfax Media, publisher of the Herald. Ten and Fairfax shares fell 56 per cent and 29 per cent respectively last year, and Rinehart lost an estimated $150 million on her substantial stakes in each company.

By contrast Rupert Murdoch's wealth jumped by $US2.9 billion to $US10.7 billion, courtesy of a 44 per cent rise in the value of his News Corporation shares as the company rebounded from the 2011 phone hacking scandal that led to the closure of the News of the World in Britain, and investors reacted positively to the proposal to spin off the company's publishing assets from the profitable Fox Group, as News will be renamed.

The aggregate worth of the world's top moguls grew by $US241 billion to $US1.9 trillion at December 31, according to the Billionaires Index, a ranking of the world's 100 wealthiest individuals.

Retail and telecoms fortunes surged about 20 per cent on average during the year. Of the 100 people who appeared on the final ranking of 2012, only 16 registered a net loss for the 12-month period.

"Last year was a great one for the world's billionaires," said John Catsimatidis, the billionaire owner of Red Apple Group, in an email written poolside on his BlackBerry in the Bahamas. "In 2013, they will continue looking for investments around the world ... that will give them an advantage."

Amancio Ortega, the Spaniard who founded retailer Inditex, was the year's biggest gainer. The 76-year-old's fortune increased $US22.2 billion to $US57.5 billion, as shares of Inditex, operator of the Zara chain, rose 66.7 per cent.

"It's an amazing company that has done great and the gains are quite justified given its performance," said Christodoulos Chaviaras, an analyst at Barclays in London. "Can they repeat that? It will be harder. A lot of the positive news is already reflected in the share price."

Global stocks soared last year. The MSCI World Index gained 13.2 per cent during the year, Wall Street was up 13.4 per cent, and European shares surged in the second half of the year. The Stoxx Europe 600's 14.4 per cent rise for the year was the best annual return since 2009.

Carlos Slim, the telecoms magnate who controls Mexico's America Movil, maintained his title as the richest person in the world. The 72-year-old's net worth rose $US13.4 billion, or 21.6 per cent, making him the second-biggest gainer by dollars.

Gains by Slim's industrial conglomerate, Grupo Carso, and Grupo Financiero Inbursa, his banking and insurance operation, more than offset the decline posted by America Movil, the largest mobile phone operator in the Americas, whose shares fell 5.8 per cent.

"America Movil is no longer the growth story that it has been, given the increase in Latin American wireless penetration over the last five years," said Chris King, an analyst at Stifel Nicolaus & Co. "It continues to generate a very high amount of cash flow and has the best set of telecom assets across Latin America."

According to King, one of Slim's biggest challenges will be dealing with regulation in Mexico and Colombia designed to punish or even-out the market share between America Movil and its competitors.

US software mogul Bill Gates, 57, ranks second on the list, trailing Slim by $US12.5 billion. The Microsoft co-founder added $US7 billion to his net worth. Microsoft stock accounts for less than 20 per cent of the billionaire's fortune.

Warren Buffett, 82, lost his title as the world's third-richest man to Ortega on August 6. The Berkshire Hathaway chairman gained $US5.1 billion during the year, even after donating 22.3 million Berkshire Class B shares in July to charity. The billionaire, who has pledged to give away most of his fortune, spent much of the year pressing for higher taxes on the wealthy.

"On incomes of over $US1 million, the excess $US1 million should have a minimum tax of 30 per cent. And then over $US10 million, 35 per cent," Buffett said in an interview in November. "Tax law should be progressive. And I think that when people make $US15 million or $US20 million or $US200 million and pay a 10 per cent rate, something should be done about it."

IKEA founder Ingvar Kamprad, 86, is the world's fifth-richest person with a $US42.9 billion fortune. The complex ownership structure behind IKEA, the world's largest furniture retailer, became more transparent in August after IKEA's franchisor published its financial performance publicly for the first time. His net worth rose 16.6 per cent last year.

Brazil's Eike Batista, 56, was the year's biggest loser by dollars, falling $US10.1 billion. The commodities maven, who vowed a year ago that he'd become the world's wealthiest man by 2015, sold a 5.63 per cent stake in his EBX Group in March to Abu Dhabi's Mubadala Development Co. As part of the deal, he pledged an unspecified additional stake in 2019 if he fails to meet a 5 per cent annual return on the sovereign wealth fund's $US2 billion investment. Batista now ranks 75th in the world with a $12.4 billion net worth. On March 27, he was worth $US34.5 billion and ranked 8th on the Bloomberg index.

Bernard Arnault, France's richest man, gained $US8.1 billion as shares of LVMH Moet Hennessy Louis Vuitton SA and its publicly traded holding company, Christian Dior, soared.

In May, the LVMH chairman's net worth was lowered $US15 billion on the index because of the way his ownership stake in the world's largest luxury goods company is structured. The 63-year-old controls 46.5 per cent of LVMH's share capital, according to the 2011 annual report of the Paris-based maker of Louis Vuitton handbags and Moet & Chandon champagne. That figure includes 5.6 per cent of LVMH shares held by Arnault, and a 40.9 per cent stake of the company owned by Christian Dior.

Arnault, who is applying for Belgian citizenship for "personal" reasons, owns 70.4 per cent of Christian Dior, according to French regulatory filings. The remaining 29.6 per cent of Dior is held by outside investors. While he controls all the voting power of Dior's stake in LVMH, his economic interest is less than the figure reported in the LVMH annual report. His net worth is valued at $US28.8 billion.

Amazon.com's chief executive, Jeff Bezos, 48, added $US6.9 billion to his net worth as shares of the world's largest online retailer rose 45 per cent. The four heirs to the Wal-Mart fortune - Jim, Christy, Alice and Rob Walton - gained a combined $US13.5 billion.

Stefan Persson, the chairman of Swedish clothing retailer Hennes & Mauritz, added $US2.7 billion.

Sheldon Adelson, gambling's richest man, gained $US2.8 billion. The 79-year-old chairman of Las Vegas Sands Corp, which operates casinos in Macau, Singapore and the US, received $US1.2 billion in December when the company paid a special dividend of $US2.75 per share. More than half of the company's revenue comes from Macau.

Lui Che Woo, the founder of Galaxy Entertainment Group Ltd, was the biggest winner on the index by percentage gain. His fortune more than doubled to $US11.9 billion.

Asia's richest man, Li Ka-Shing, rose $US6.4 billion. The 84-year-old chairman of Hong Kong property developer Cheung Kong Holdings ranks 11th on the list with a net worth of $US28.6 billion.

Zong Qinghou, head of China's third-largest beverage maker, became the country's richest man in September after disclosing his stake in Hangzhou Wahaha Group was more than double previous estimates. The 67-year-old soda and juice tycoon owns more than 80 per cent of Wahaha, giving Zong a net worth of $US15.8 billion, according to the Bloomberg ranking. He is $US8.4 billion wealthier than Robin Li, founder of Baidu, China's biggest internet search engine operator.

Facebook founder Mark Zuckerberg lost $US5.2 billion during the year after the company's shares fell 30 per cent following its initial public offering in May. Investors sued Facebook, the operator of the world's largest social network, after its stock dropped following the largest technology IPO in history. The investors claim the company failed to disclose discussions it had with underwriters' analysts about advertising revenue.

In December, the 28-year-old donated almost $US500 million in Facebook stock to the Silicon Valley Community Foundation. The gift is to "lay a foundation for new projects," Zuckerberg said on his Facebook page. The executive and his wife, Priscilla, signed a pledge two years ago committing the majority of their wealth to charity. He is worth $US12.3 billion.

"In 2012, high net worth people focused on the things they could control: lifestyle and concierge services, managing their art collections and family security," said Armand Del Medico, a wealth adviser for UBS Financial Services. "Looking forward, there is more of an appetite to look at opportunities outside of traditional investments and increased global exposure."

1. CARLOS SLIM

21.6%

$75.2b

2. BILL GATES

12.6%

$62.7b

4. WARREN BUFFETT

12%

$47.9b

39. GINA RINEHART

$18.6b

7.9%

96. RUPERT MURDOCH

37.8%

$10.7b

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