RICH PICKINGS: Tall poppies of the East

The term 'billionaire' used to be associated with the US and Europe – the West. Now, a new crop of super-rich is growing in the East.

The annual report on the world’s billionaires released by Forbes magazine late this week offers a very different perspective on the state of the global economy. And despite recent volatility on equity markets, there is still a lot of money being made.

For the first time, the number of billionaires on the list hit four figures, with 226 newcomers taking the total number of people on the list to 1125. Their total wealth was $US4.4 trillion, an increase of $US900 billion.

A 25 per cent increase in a volatile year is impressive, but consider how the Forbes list has changed over the past five years. In 2003, there were 476 members of the list, worth $US1.4 trillion – in five years, the total wealth held by members of the list has more than tripled.

It’s easy to see the reason. While the ranks of the world’s billionaires have been dominated for decades by members from the United States and western Europe, the boom economies of Russia, India and China have emerged as powerful forces. Just two years ago, half of the top 20 were from the US. This year, the US had four members, as did Russia and India (including four members in the top 10).

Veteran investor Warren Buffet has withstood the recent sharemarket volatility and replaces Bill Gates at the top of the list with a fortune of $US62 billion. Gates drops to third place with $US52 billion, behind Mexican telecommunications entrepreneur Carlos Slim, who was valued at $US60 billion.

The next three places are filled by Indians. Many Australian would know steel baron Lakshmi Mittal, who comes in at position four with $US45 billion, but brothers Mukesh and Anil Ambani, who fill places five and six with $US57 billion and $US50 billion respectively, are less well known.

The Ambani boys inherited their fortune from their father, industrialist Dhirubhai Ambani, who died in 2002. But differences emerged between the two sons and three years later their mother was forced to broker a peace agreement that split the family’s assets. Mukesh took control of petrochemical giant Reliance Industries (India’s biggest company by market capitalisation) while Anil got control of telecommunications company Reliance Communications. In February, Anil launched the biggest ever IPO in Indian history with his company Reliance Power.

What is particularly staggering about the pair is the amount of money they have made in the last year: Mukesh’s fortune increased $US22.9 billion while Anil’s soared $US23.8 billion. The spectacular rise of the Ambani brothers is a good indication of the sheer amount of money that can be made in India. It also highlights how wealthy Indian entrepreneurs could well dominate the ranks of the world’s billionaires in the future.

Another feature of the list this year the is age of many of the newcomers. There were 25 additions under the age of 40, taking the total number of members under 40 years to 50. While many of these youngsters have inherited their fortune, there’s a distinctly dot-com feel to the self-made young turks, as highlighted by Facebook founder Mark Zuckerberg, who joins the list at the age of 23 with $US1.5 billion.

Forbes, which says Zuckerberg is possibly the youngest self-made billionaire ever, has been extremely (and deliberately) conservative with his valuation. While Google’s $US240 million purchase of a 1.6 per cent stake in Facebook last year valued the company at $US15 billion, Forbes has chosen to value the company at $US5 billion. No crazy dot-com valuations here, thanks very much.

The Forbes list contains 13 Australians, led by Fortescue Metals’ chief executive Andrew Forrest, with $US6.5 billion. The spectacular performance of Fortescue’s shares – which have quadrupled in the past year – has helped Twiggy knock James Packer ($US5.7 billion) off his perch as the richest Australian on the list. There are also two new entrants from Australia: Platinum Asset Management chief Kerr Neilson (valued at $US2 billion) and WorleyParsons founder John Grill ($US1.1 billion).

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