RICH PICKINGS: New wealth order

If your share portfolio is looking a bit sickly then spare a though for the mega rich. The credit crisis has completely rearranged the pecking order of Australia's most wealthy.

The spectacular fall of Fortescue Metals Group founder Andrew Forrest has been just one of the subplots to the current market turmoil.

Just over four months ago, Forrest was officially crowned Australia’s richest person in the annual BRW’s Rich 200 , with a staggering fortune of $9.41 billion. A month later, with shares in his iron ore mining company soaring, Forrest’s wealth reached $12.2 billion, towering above his rich list rivals, Frank Lowy and James Packer.

But the crash has not been kind to Twiggy, as he is affectionately known. Since the peak in June, Fortescue Metals Group has dropped a staggering 68 per cent from $12.13 to around $2.84.

Forrest’s stake is now worth $2.9 billion, which means he has lost $9.3 billion in just over four months. That’s about $87 million a day, or $3.6 million an hour. Ouch.

So where does Forrest sit on the league table of Australia’s richest people? Here’s what the top 10 of the Rich 200 looked like waaaaay back in May, when the world was much nicer place, and much richer to boot:


Rank
Name
Billions
1
Andrew Forrest
$9.4
2
Frank Lowy
$6.3
3
James Packer
$6.1
4
Richard Pratt
$5.5
5
Gina Rinehart
$4.4
6
Harry Triguboff
$3.3
7
John Gandel
$3.2
8
Kerry Stokes
$2.8
9
Shi Zhengrong
$2.3
10
David Hains
$2.3


Fast forward to today, and the top ten would look something like this, based on my calculations:
Rank
Name
Billions
1
Frank Lowy
$5.6
2
Richard Pratt
$5.0
3
James Packer
$4.4
4
John Gandel
$3.1
5
Andrew Forrest
$2.9
6
Kerry Stokes
$2.5
7
Harry Triguboff
$2.3
8
Gina Rinehart
$2.2
9
Shi Zhengrong
$2.1
10
Len Buckeridge
$2.1


It must be noted at these are very rough estimates, based on share price movements and some back-of-the-envelope calculations of how the value of private assets may have slipped, using similar listed companies as a proxy.

It’s not a perfect valuation method, but it does provide a guide to how the credit crunch is reshaping the landscape of Australian wealth.

There’s little doubt Frank Lowy is now Australia’s richest man. At the end of May, Lowy’s stake in Westfield was worth $3.14 billion and his private assets (including big chunks of property and other investments) were worth about $3.16 billion. Using the Westfield share price a rough proxy for Lowy’s entire portfolio, we can see Lowy’s wealth has fallen just 10.5 per cent. It’s an incredible result given the recent turmoil on global financial markets.

James Packer’s fortune has taken a battering, with the value of his listed portfolio falling from around $4.2 billion at the end of May to $2.7 billion today. His private collection of investments is also likely to have taken a bit of a hit given the state of the economy, but he has had some wins, such as profit on the sale of his investment in PC Tools which was recently acquired by Symantec for $300 million. His fortune is likely to be around $4.4 billion.

Calculating the value of Richard Pratt’s assets – including his Visy empire and his investment company, Thorney – is not easy. Packaging company Amcor, which has fallen about 9 per cent in value since the end of May, provides a rough proxy, although the value of Thorney’s portfolio (which contains a lot of small and midcap stocks) is likely to have fallen a lot further.

Gina Rinehart’s Rich 200 valuation was seen as very conservative by many, but the lack of clarity about the size and quality of her iron ore assets justifies a conservative approach. Rinehart’s big joint venture with Rio Tinto makes that company a reasonable proxy for the valuation. Rio’s shares have slid 50 per cent since the end of May, which takes Rinehart’s wealth down to $2.4 billion.

The king of Sydney’s apartment sector, Harry Triguboff, has seen the booms and busts come and go during his long property career and he’s survived and thrived though them all. But the Sydney property market is broken at the moment and Triguboff’s portfolio must have taken a battering. Finding a proxy for Triguboff’s company Meriton is not easy. Mirvac and Sunland Development Group are perhaps the closest comparisons and these companies have slipped in value by around 30 per cent since the publication of the Rich 200.

The value of John Gandel’s stake in the CFS Retail Property Trust has fallen by just 4.6 per cent since May. Using this is a rough proxy for Gandel’s wider portfolio, his fortune falls from $3.21 billion to $3.06 billion.

Kerry Stokes has had a tough time since the publication of the Rich 200, with his stake in Seven Network slumping from $820 million to $574 million, while the value of his stake in Nylex is down by $34 million. Stokes’ private investments include a big stake in heavy equipment company Caterpillar, which should still be doing reasonably well from the resources boom. Stokes’ fortune has fallen at least $270 million to around $2.49 billion.

Shi Zhengrong, an Australian citizen and chief executive of Chinese solar company Suntech Power, has had an extremely difficult year with the company’s stock price plunging from $US40.52 to $24.61. That has wiped just under $US1 billion off the value of his stake, which is now worth $US1.4 billion. But the recent slide in the value of the Australian dollar keeps Shi firmly in the top 10 with $2.05 billion.

Estimating who takes out the 10th spot isn’t easy. It’s a contest between Perth building materials billionaire Len Buckeridge, who was valued at $2.1 billion back in May and reclusive hedge fund investor David Hains, who was valued at $2.28 billion.

Hains couldn’t have helped but take a bath in the last four months and it would be safe to assume his fortune is down at least 20 per cent, given most world markets have shed around 30 per cent since then. That puts his fortune around $1.8 billion.

On the other hand, Buckeridge is based in the booming WA construction sector, one of the few hotspots left in the country. On top of that, shares in Brickworks, one of his biggest competitors, are actually up 15 per cent since late May. Buckeridge’s fortune should have at least held steady at $2.1 billion.