RICH PICKINGS: The 12 to watch in 2012

Gerry Harvey's Magic Millions is normally a good guide to how Australia's wealthy are travelling, and with prices at the event declining, it will interesting to see how the rich list travels in the year ahead.

The year in wealth always starts with Gerry Harvey and his Magic Millions thoroughbred racing sale.

It’s a nice guide to how the wealthy are travelling. Last year, the average sale price at Magic Millions was down about six per cent, while across the year the wealth of the top 20 members of the Australian rich list was down about 11 per cent.

A dip in prices suggests the rich are wary and Gerry Harvey is tipping the 2012 sales will be weaker again.

"I don’t think we’ll see anything make the million-dollar mark this year: it’s definitely a buyer’s market with bargains to be had,” Harvey told the Australian Financial Review last week.

"This year a lot of horses will sell for $30,000 to $200,000. Horses that used to go for $2.2 million now go for $500,000.”

Could that suggest even bigger woes ahead for the rich? It will certainly give Harvey something to think about.

Having taken full ownership of the Magic Millions business last year after buying out John Singleton, a drop in prices will mean a drop in income from the auction house. As if Harvey didn’t have enough to worry about with Harvey Norman spluttering.

Harvey is one of the rich list members to watch in 2012. In a seemingly short space of time, his company has become a case study in how structural change is tearing through the retail sector – fragile consumer confidence, the rise of online sales, the sudden problem of stores that will barely break even and question marks over the value of retail property.

What will another year of sluggish conditions do to Harvey Norman and Gerry’s fortune? Could his billionaire status be in jeopardy at the end of 2012?

We’ll be watching Gerry closely this year, along with these 11 entrepreneurs:

Gina Rinehart

What a year this promises to be for Australia’s richest person. She faces the prospect of a bitter court dispute with three of her children becoming public and then potentially impacting her fortune. She’s also involved in the development of her Roy Hill iron ore mine, the expansion of the Hope Downs mine and two giant coal projects. There’s also the question of how she might develop her media investments in the next 12 months. As a Ten Network director, can she put her personal touch on the network’s turnaround?

Andrew Forrest

There’s one key question for Twiggy: will he be a company director by year’s end? His battle with ASIC will move to the High Court this year and while Forrest says life and Fortescue Metals will go on if ASIC’s ban does stand, it would undoubtedly make life much more difficult. As will the mining tax, which Forrest says he will continue to fight against.

Clive Palmer

Late last year, a report in Queensland’s Courier Mail newspaper suggested that Clive Palmer may again try to list his mining giant Resourcehouse on the Hong Kong Stock Exchange, but after four previous failed attempts it’s natural to be sceptical. But surely Palmer must get moving on his giant China First coal project, which remains well behind schedule and well off going into production.

Frank Lowy

It’s not so much Frank Lowy that is worth watching as it is his Westfield empire. The shopping centre giant is one of Australia’s most iconic companies, but it stands at an interesting junction. The retail sector being restructured and exactly how that will impact retail landlords is unclear. With its blue-chip locations, Westfield is likely to be the last hit, but its performance will be studied carefully as a sectoral bellwether.

James Packer

Packer had an interesting year in 2011, but not because of any investment in casinos or media. His investment in online retailers DealsDirect and Catch Of The Day was as unexpected as it was shrewd – Packer chose well and has backed two of the leaders of the Australian sector. But it remains to be seen whether there are more of these deals to come. Will Packer continue to target smaller businesses as a sort of angel investor?

Solomon Lew

It seems that if a retail asset is on the sale block, by law the name of Solomon Lew needs to be mentioned as a possible buyer – regardless of the fact he hasn’t actually bought any businesses in the past few years. Like Gerry Harvey, Lew must try to steer his business through the restructuring of the retail sector. He’s got Mark McInnes in charge of his retail businesses and already the pair are talking tough, leaning on landlords for better rates and taking the axe to unprofitable stores. Can they catch the start of a wave of retail recovery?

Nathan Tinkler

The Newcastle-based coal baron remains one of the most fascinating members of the rich list. He finished 2011 on a high, agreeing to merge Aston Coal with Whitehaven Coal in a deal that should leave him with a $970 million stake in the latter. But is he a holder or a seller? History says he doesn’t hold onto assets and Tinkler is already talking about overseas mining opportunities.

John Symond

The housing market might be struggling, but John Symond had a cracking 2011, with his Aussie Home Loans business posting a 39 per cent increase in net profit to $52 million. The company, which is 33 per cent owned by Commonwealth Bank, now wants to push into wealth management and financial planning. Are those sectors ripe to be "saved” by Aussie John?

Terry Peabody

Terry Peabody’s decision to sue Transpacific Industries, the company he founded and led for more than two decades, suggests he might be in for a big year. Peabody, who still owns seven per cent of the company, isn’t happy with the board and in particularl their handling of a recent capital raising (which is the subject of a Queensland Supreme Court action). Will he continue to push for change? Stay tuned.

Gordon Merchant

The Billabong founder’s wealth was hammered after the company’s recent profit warning and the tide is well and truly out on his fortune. In 2007, Merchant was worth $904 million; this year he’s likely to be worth less than $300 million. Merchant hasn’t had a day-to-day role at Billabong for some time, but with the company’s share price in the doldrums, could he make a bold attempt to regain control?

David Teoh

David Teoh, the founder and chief of junior telco TPG, rarely talks to the media and he’s all the more fascinating for it. Last year TPG built a strategic stake in fellow telco junior iiNet, and speculation about a possible takeover isn’t going to go away soon. With the NBN on the way, there are predictions the telco sector will consolidate to a handful of players. Will Teoh be hunted or a hunter?

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