Dan Gertler, whose grandfather co-founded Israel’s diamond exchange in 1947, arrived in Congo in 1997 seeking rough diamonds. The 23-year-old trader struck a deep friendship with Joseph Kabila, who then headed the Congolese army and today is the nation’s president. Since those early days, Gertler has invested in iron ore, gold, cobalt and .
Diamonds have been a backdrop to Gertler’s life since his childhood in affluent northern Tel Aviv, where he had a secular upbringing. His mother ran a pop-music radio station, and his father was a goalkeeper for Maccabi Tel Aviv, a top-division pro soccer team, before becoming a diamond dealer.
As a youth, Gertler got up at 5 a.m. to learn how to polish gems before heading to school. He joined his grandfather, Romanian emigre Moshe Schnitzer, at business meetings to watch him negotiate diamond deals. When Schnitzer died in 2007, Benjamin Netanyahu, who’s now Israel’s prime minister, gave a eulogy.
Gertler, sitting below a stained-glass dome at his office in one of the Israel Diamond Exchange’s four towers in Ramat Gan, just east of Tel Aviv, turns wistful when he talks about Schnitzer. He recalls a business lesson his grandfather imparted: “He told me: ‘Dan, you meet your bankers and you ask for credit only when you don’t need it. Just to secure it. Because when you need it, it is too late.
At age 22, Gertler started buying rough diamonds so he could work with larger volumes, he says. Gertler flew between war-torn nations such as Liberia and Angola and the major diamond centers in the U.S., India and Israel, buying and selling gems, he says.
“From the beginning, he went his own way,” says his uncle, Shmuel Schnitzer, 63, who was president of the World Federation of Diamond Bourses from 2002 to 2006.“The guy has guts. This is the basic thing about him.”
Gertler broke with his family’s secular tradition when he and Anat decided to adopt an ultra-Orthodox lifestyle. They’ve banned television and computers from their five-story, terraced house in Bnei Brak, whose crisp stone finishing and verdant shrubbery lining each floor contrast with the neighbors’ concrete apartment buildings.
Gertler, meanwhile, won back a near monopoly of Congo’s diamond trade. One of his companies, Canada-based Emaxon Finance International Inc., paid $15 million in cash and loans to the country’s state-owned diamond miner, known as MIBA, for a four- year contract to sell 88 percent of its production.
Congo was desperate for investment at the time, Frazer says. “It’s not like he crowded out a lot of other investors,” she says. “There weren’t many.”
Kabila, who had formed a government in which former rebel chiefs were cabinet ministers as part of the peace deal, tried to kick-start Congo’s economy. The ministers signed dozens of deals to exploit the country’s natural resources with foreign companies, many of them at prices that undervalued the assets, according to reports by the World Bank and the Congolese Parliament.
In 2006, Kabila’s People’s Party for Reconstruction and Development, with a platform of rebuilding the country’s war- ravaged infrastructure, was elected in Congo’s first free elections in four decades, certified by the UN.
Gertler’s dealings can be wildly profitable. In one case, he earned a 500 percent return in just six months without risking a single penny as the middleman in a deal for Societe Miniere de Kabolela & Kipese SPRL, or SMKK, which owns a copper and cobalt deposit in the heart of Katanga’s richest mining zone.
In 2009, SMKK was half-owned by the state’s Gecamines, short for La Generale des Carrieres & des Mines , and half-owned by ENRC, the Kazakh-founded mining company that’s listed on the London Stock Exchange. ENRC wanted to acquire all of SMKK but didn’t exercise its right of first refusal to buy the government’s stake, according to the joint-venture agreement.
Instead, ENRC made a deal with a company controlled by Gertler’s family trust -- Emerald Star Enterprises Ltd., based in the British Virgin Islands. On Dec. 21, 2009, ENRC paid the Gertler firm $25 million for an option to buy the remaining 50 percent stake of SMKK, according to filings ENRC made with the London Stock Exchange.
Gertler didn’t even own the asset he was selling the option on -- at least not yet.
Thursday, December 13, 2012
Wednesday, December 5, 2012
Hidden Billionarie Alvaro Saieh
Alvaro Saieh, 62, became a billionaire after his shares of Corpbanca (CORPBANC), Chile’s sixth-biggest lender, jumped 63 percent in 2009, more than doubling the following year. His 63 percent stake is now worth more than $2.1 billion.
Saieh, who earned a doctorate at the University of Chicago and traces his roots to Palestine, formed his company by leading the takeover of century-old Banco de Concepcion in 1995 and using it to buy up rivals.
In December, Saieh oversaw the $1.16 billion acquisition of Banco Santander SA (SAN)’s Colombian unit, helping Corpbanca become the first Chilean financial institution to own a foreign bank.
A press official representing Saieh, who asked not to be named due to internal policy, said his closely held retail, insurance and media assets are worth $2.6 billion not including debt. SMU SA, his chain of supermarkets and retail stores, reported 2010 sales of $2.2 billion.
The number of billionaires that remain uncovered is difficult to quantify. “It’s hard to give you a number. You should question anyone who claims they can,” said Anthony DeChellis, head of Private Banking Americas for Credit Suisse in New York. “It is a very difficult thing to know.”
Saieh, who earned a doctorate at the University of Chicago and traces his roots to Palestine, formed his company by leading the takeover of century-old Banco de Concepcion in 1995 and using it to buy up rivals.
In December, Saieh oversaw the $1.16 billion acquisition of Banco Santander SA (SAN)’s Colombian unit, helping Corpbanca become the first Chilean financial institution to own a foreign bank.
A press official representing Saieh, who asked not to be named due to internal policy, said his closely held retail, insurance and media assets are worth $2.6 billion not including debt. SMU SA, his chain of supermarkets and retail stores, reported 2010 sales of $2.2 billion.
The number of billionaires that remain uncovered is difficult to quantify. “It’s hard to give you a number. You should question anyone who claims they can,” said Anthony DeChellis, head of Private Banking Americas for Credit Suisse in New York. “It is a very difficult thing to know.”
Hidden Billionarie Alberto Benavides
Alberto Benavides and his family have seen their 28 percent voting stake in Cia. de Minas Buenaventura SA, Peru’s biggest producer of precious metals, jump five-fold in a decade to $2.7 billion. Today Benavides, 91, owns $1.2 billion of the company’s stock after giving the rest in equal parts to his five children last year.
Based on an analysis of dividends, local taxes and market performance, the Benavides family probably has an investment portfolio worth at least $250 million. “We’re people who have no interest in ostentation or luxury,” Roque Benavides, who has led the company since his father retired, said in an e-mail.“We’re working people whose goal is to contribute to the social development of Peru.”
Based on an analysis of dividends, local taxes and market performance, the Benavides family probably has an investment portfolio worth at least $250 million. “We’re people who have no interest in ostentation or luxury,” Roque Benavides, who has led the company since his father retired, said in an e-mail.“We’re working people whose goal is to contribute to the social development of Peru.”
Hidden Billionarie Antonio del Valle
Antonio del Valle, 74, has turned Mexichem SAB into one of the largest chemical producers in the Americas by acquiring more than 15 competitors since 2007. The Tlalnepantla, Mexico-based company’s shares have surged more than 50-times since 2002, making his family’s 48 percent stake, which he controls, worth $3.2 billion.
Del Valle got his start in banking. He served as chief executive of Grupo Financiero Bital SA until his partners sold it to HSBC Holdings Plc in 2002, paying him in cash and shares of Mexichem -- then known as Grupo Industrial Camesa.
Mexican regulatory filings indicate the family has been able to increase its stake in Mexichem by reinvesting most of their dividends and proceeds from a 2005 stock sale back into the company.
Del Valle also owns closely held lender Grupo Financiero Ve Por Mas SAB and Elementia SA, which makes copper and aluminum products and is part-owned by Carlos Slim, the world’s richest man according to the Bloomberg Billionaires Index. He controls all three stakes through his holding company, Grupo Empresarial Kaluz SA. Del Valle’s personal assistant said he was unavailable for comment
Del Valle got his start in banking. He served as chief executive of Grupo Financiero Bital SA until his partners sold it to HSBC Holdings Plc in 2002, paying him in cash and shares of Mexichem -- then known as Grupo Industrial Camesa.
Mexican regulatory filings indicate the family has been able to increase its stake in Mexichem by reinvesting most of their dividends and proceeds from a 2005 stock sale back into the company.
Del Valle also owns closely held lender Grupo Financiero Ve Por Mas SAB and Elementia SA, which makes copper and aluminum products and is part-owned by Carlos Slim, the world’s richest man according to the Bloomberg Billionaires Index. He controls all three stakes through his holding company, Grupo Empresarial Kaluz SA. Del Valle’s personal assistant said he was unavailable for comment
Hidden Billionarie Samuel Klein
Surging economic growth in Latin America is minting a new wave of wealthy tycoons. Booming consumer demand in Brazil has made Samuel Klein, an 88-year-old Polish immigrant and Holocaust survivor, and his son Michael, billionaires. In 2009, Klein sold his chain of home-appliance stores, Casas Bahia Comercial Ltda., to retail billionaire Abilio Diniz.
The Klein family received a combined 47 percent stake in Via Varejo SA (GLOB3), as the unit of Diniz’s flagship Cia. Brasileira de Distribuicao Grupo Pao de Acucar is now known. The stake is worth $2 billion today, with Samuel Klein owning 54 percent. Michael Klein, 59, who is Casas Bahia’s chief executive officer and Via Varejo’s chairman, controls the rest.
The Kleins also have cash. As part of the sale to Diniz, the family kept Casas Bahia’s property holdings. Diniz pays them 140 million reais ($78 million) a year in rent. Casas Bahia’s press office said the family was unavailable to comment.
The Klein family received a combined 47 percent stake in Via Varejo SA (GLOB3), as the unit of Diniz’s flagship Cia. Brasileira de Distribuicao Grupo Pao de Acucar is now known. The stake is worth $2 billion today, with Samuel Klein owning 54 percent. Michael Klein, 59, who is Casas Bahia’s chief executive officer and Via Varejo’s chairman, controls the rest.
The Kleins also have cash. As part of the sale to Diniz, the family kept Casas Bahia’s property holdings. Diniz pays them 140 million reais ($78 million) a year in rent. Casas Bahia’s press office said the family was unavailable to comment.
Hidden Billionarie William R. Berkley
William R. Berkley, 66, built his estimated $1.2 billion fortune by creating what became W.R. Berkley Corp. (WRB)The $4.9 billion Greenwich, Connecticut-based company has 48 operating units underwriting a spectrum of property and casualty risks, from pleasure aircraft to cyber security.
Berkley owns about 18 percent of the company, a stake worth almost $900 million today. He has also collected more than $51 million in company dividends since 1980, and has collected more than $85 million in salary and bonuses since 1993. In 2006 and 2007, Berkley earned $58 million selling shares of First Marblehead Corp., a Boston-based student loan company he has been a director of since 1995.
“He’s very private about his wealth,” said Karen Horvath, a spokesman for W.R. Berkley Corp. “He prefers not to be on any lists.”
Berkley owns about 18 percent of the company, a stake worth almost $900 million today. He has also collected more than $51 million in company dividends since 1980, and has collected more than $85 million in salary and bonuses since 1993. In 2006 and 2007, Berkley earned $58 million selling shares of First Marblehead Corp., a Boston-based student loan company he has been a director of since 1995.
“He’s very private about his wealth,” said Karen Horvath, a spokesman for W.R. Berkley Corp. “He prefers not to be on any lists.”
Hidden Billionarie Graham Weston
Graham Weston, 48, has also avoided being ranked with the world’s richest, partly by running a technology company in San Antonio, Texas -- 1,700 miles from Silicon Valley. Weston owns about 15 percent of Rackspace Hosting Inc. (RAX), a provider of Web-based information-technology systems. His stock is worth almost $1.1 billion.
The company held its initial public offering in August 2008. Rackspace shares have surged more than 12-fold since hitting a low of $4 per share in February 2009, making Weston, the company’s largest shareholder, a billionaire.
Weston loathes talking about his wealth. After seeing glitzy dot-coms fail spectacularly a decade ago he, along with his Rackspace cohorts, decided to adopt what they call a no-stars policy.
“We said we wanted to be judged on our substance, not our flash,” Weston said in a telephone interview on March 14.
Weston has put some of his money -- he’s sold about $60 million of Rackspace stock since 2008 -- into helping entrepreneurs and local students. Weston and Rackspace employees have contributed $2 million in grants to spruce up local schools, fund mentoring programs and provide supplies.
“It’s a way for a corporation to interface in a philanthropic way, not just with money but with our own enthusiasm,” Weston said. “We really adopted a new model, which is the idea that a corporation takes accountability for the success of the schools around it and gets directly involved.”
The company held its initial public offering in August 2008. Rackspace shares have surged more than 12-fold since hitting a low of $4 per share in February 2009, making Weston, the company’s largest shareholder, a billionaire.
Weston loathes talking about his wealth. After seeing glitzy dot-coms fail spectacularly a decade ago he, along with his Rackspace cohorts, decided to adopt what they call a no-stars policy.
“We said we wanted to be judged on our substance, not our flash,” Weston said in a telephone interview on March 14.
Weston has put some of his money -- he’s sold about $60 million of Rackspace stock since 2008 -- into helping entrepreneurs and local students. Weston and Rackspace employees have contributed $2 million in grants to spruce up local schools, fund mentoring programs and provide supplies.
“It’s a way for a corporation to interface in a philanthropic way, not just with money but with our own enthusiasm,” Weston said. “We really adopted a new model, which is the idea that a corporation takes accountability for the success of the schools around it and gets directly involved.”
Hidden Billionarie Steven Bresky
Billionaire Steven Bresky, 58, has eluded the limelight that usually accompanies great wealth for five years.
In 2007, Bresky inherited his father’s 74 percent stake inSeaboard Corp. (SEB), a $5.7 billion commodities trading and cargo shipping company that generated almost a third of its revenue last year slaughtering 5 million hogs. Bresky’s stock is worth $1.7 billion today.
“He must regretfully decline to be interviewed,” said Bresky’s assistant, Amanda Doyle, from the company’s Merriam, Kansas, headquarters on March 14. “He just doesn’t do a lot of stories.”
An analysis of stakes held in publicly traded U.S. and Latin American companies uncovered Bresky and seven other billionaires who haven’t appeared in any major international wealth rankings. Most of their 10-figure fortunes are derived from public holdings and dividend income.
Bresky, Seaboard’s chairman, has remained under the radar by owning his shares, which are down 9 percent since he inherited them, through two Newton, Massachusetts-based holding companies, Seaboard Flour LLC and SFC Preferred LLC. Seaboard Corp., which also has sugar and power operations, bought half of the Butterball turkey brand for $178 million last year from Garner, North Carolina-based Maxwell Group.
Bloomberg Businessweek
In 2007, Bresky inherited his father’s 74 percent stake inSeaboard Corp. (SEB), a $5.7 billion commodities trading and cargo shipping company that generated almost a third of its revenue last year slaughtering 5 million hogs. Bresky’s stock is worth $1.7 billion today.
“He must regretfully decline to be interviewed,” said Bresky’s assistant, Amanda Doyle, from the company’s Merriam, Kansas, headquarters on March 14. “He just doesn’t do a lot of stories.”
An analysis of stakes held in publicly traded U.S. and Latin American companies uncovered Bresky and seven other billionaires who haven’t appeared in any major international wealth rankings. Most of their 10-figure fortunes are derived from public holdings and dividend income.
Bresky, Seaboard’s chairman, has remained under the radar by owning his shares, which are down 9 percent since he inherited them, through two Newton, Massachusetts-based holding companies, Seaboard Flour LLC and SFC Preferred LLC. Seaboard Corp., which also has sugar and power operations, bought half of the Butterball turkey brand for $178 million last year from Garner, North Carolina-based Maxwell Group.
Bloomberg Businessweek
Tuesday, December 4, 2012
Hidden Billionarie Phillip Ragon
Phillip Ragon, who goes by Terry, is the founder and sole owner of Cambridge, Massachusetts-based InterSystems Corp., the biggest provider of database management services in the health- care industry. With 80,000 customers and $385 million in annual revenue, closely held InterSystems is worth more than $2 billion, according to the Bloomberg Billionaires Index.
“InterSystems provides a very strong integration engine platform widely used in the health-care market space,” said Lynne Dunbrack, program director of connected health strategies at market research company IDC Health Insights, in a phone call from its Framingham, Massachusetts, headquarters. “Their customers continually praise them for their development team and their support staff.”
While Ragon, 62, keeps a lower profile than other database billionaires, including Larry Ellison, chairman of Redwood City, California-based Oracle Corp. (ORCL), he has engaged in the kind of jostling -- feuding with Microsoft Corp. (MSFT)taking private equity company Blackstone Group LP (BX) to court -- that Ellison is known for. He is also demonstrating some of his peers’ largesse, pledging $100 million to fight AIDS.
Catherine Marenghi, a spokeswoman for Ragon, said he declined to comment on his net worth.
The growing electronic medical records business led Ellison’s Oracle to acquire health-care technology firms such as Phase Forward Inc. and ClearTrial LLC. As those database companies vie for position, they face an entrenched adversary in InterSystems.
Armed with a physics degree from the Massachusetts Institute of Technology
, Ragon founded database company Interpretive Data Services in Brighton, Massachusetts, in 1978, according to articles of incorporation filed with the Massachusetts Secretary of State. In the years that followed, Ragon built applications for local medical organizations, such as Massachusetts General Hospital. He changed the company’s name to InterSystems in 1980.
The result was so successful for the VA that Ragon was called to testify before a Senate committee researching electronic health records in 2006.
“I had people come up to me in tears, telling me they called their family members who were veterans of the Vietnam War, and they were just in tears because of the unbelievable improvement that’s occurred,” he told the committee.
A provision in the American Recovery and Reinvestment Act of 2009 provided $26 billion in financial incentives for using digital health records. Outpatient physicians, for instance, could receive as much as $63,000 from Medicaid over five years if they prove they are using the technology.
So far, InterSystems has won contracts to build such systems in New York, Missouri, Rhode Island and Illinois.
InterSystems’s biggest battle with Redmond, Washington- based Microsoft, the world’s largest software maker, was over real estate. In 2007, Microsoft signed an agreement to lease additional space in the 17-story building it shares with InterSystems on the bank of the Charles River in Cambridge, Massachusetts.
Ragon sued the landlord, New York-based Blackstone’s Equity Office Properties unit, claiming his company had the right of first refusal on the space, and that EOP and Microsoft conspired to raise rents in the building, according to court documents. The matter was settled out of court in 2009.
Ragon’s group gathered 7,554 voters, 12 percent of Cambridge’s electorate, and got the city council to rescind the permission in 2010. Microsoft later put its logo atop a nearby office building not subject to zoning restrictions.
Ragon has been active in giving to national politicians. In 2004, he and his wife, Susan, donated $3 million to America Coming Together, a political action committee backed that year by George Soros that sought to defeat George W. Bush in the U.S. presidential election. Since then, the couple has donated almost $700,000 to Democratic Party candidates, according to Washington, D.C.-based Center for Responsive Politics.
Ragon’s biggest charitable gift has been to fight AIDS. In 2009, he pledged $100 million to Massachusetts General Hospital -- the hospital’s largest gift ever -- to form the Ragon Institute of MGH, MIT and Harvard. The cross-institution organization is dedicated to developing an AIDS vaccine.
According to a rare interview Ragon gave to the Boston Globe in conjunction with the gift, it was a 2007 trip to South Africa arranged by Bruce Walker, an AIDS researcher who now heads the institute, that convinced Ragon he could make a difference.
“You might say back in Newton’s time, you could be a solo physicist conducting research,” the newspaper quoted Ragon as saying. “But today, you need projects where large groups of people come together to focus on advancing the state of science.”
----With assistance from John Lauerman in Boston. Editors: Peter Newcomb, Matthew G. Miller
To contact the reporter on this story: Brendan Coffey in Boston at bcoffey10@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
“InterSystems provides a very strong integration engine platform widely used in the health-care market space,” said Lynne Dunbrack, program director of connected health strategies at market research company IDC Health Insights, in a phone call from its Framingham, Massachusetts, headquarters. “Their customers continually praise them for their development team and their support staff.”
While Ragon, 62, keeps a lower profile than other database billionaires, including Larry Ellison, chairman of Redwood City, California-based Oracle Corp. (ORCL), he has engaged in the kind of jostling -- feuding with Microsoft Corp. (MSFT)taking private equity company Blackstone Group LP (BX) to court -- that Ellison is known for. He is also demonstrating some of his peers’ largesse, pledging $100 million to fight AIDS.
Catherine Marenghi, a spokeswoman for Ragon, said he declined to comment on his net worth.
Veterans Breakthrough
Ragon is poised to seize on the expanding market for converting paper medical records into electronic files, Dunbrack said. Only 18 percent of the nation’s hospitals and 34 percent of private practitioners have a basic electronic health-record system, according to a September report by the Washington, D.C.- based non-profit Institute of Medicine. Funding provided by the U.S. government, including an electronics records earmark in the Affordable Care Act, should also encourage hospitals and doctors to go digital, Dunbrack said.The growing electronic medical records business led Ellison’s Oracle to acquire health-care technology firms such as Phase Forward Inc. and ClearTrial LLC. As those database companies vie for position, they face an entrenched adversary in InterSystems.
Armed with a physics degree from the Massachusetts Institute of Technology
, Ragon founded database company Interpretive Data Services in Brighton, Massachusetts, in 1978, according to articles of incorporation filed with the Massachusetts Secretary of State. In the years that followed, Ragon built applications for local medical organizations, such as Massachusetts General Hospital. He changed the company’s name to InterSystems in 1980.
‘In Tears’
In 1994, Ragon acquired the health-care database division of struggling Digital Equipment Corp., a purchase that almost doubled annual sales to $33 million. In 2003, the company created an electronic health-record database for the U.S. Department of Veterans Affairs, integrating 130 different platforms being used throughout the VA system.The result was so successful for the VA that Ragon was called to testify before a Senate committee researching electronic health records in 2006.
“I had people come up to me in tears, telling me they called their family members who were veterans of the Vietnam War, and they were just in tears because of the unbelievable improvement that’s occurred,” he told the committee.
A provision in the American Recovery and Reinvestment Act of 2009 provided $26 billion in financial incentives for using digital health records. Outpatient physicians, for instance, could receive as much as $63,000 from Medicaid over five years if they prove they are using the technology.
Fighting Microsoft
The Affordable Care Act, passed in 2010, provides additional inducements for doctors and health-care facilities to use electronic records, and encourages states to create medical databases. The bill requires all states to establish electronic health-care exchanges by 2014 to make it easier for consumers to purchase health insurance.So far, InterSystems has won contracts to build such systems in New York, Missouri, Rhode Island and Illinois.
InterSystems’s biggest battle with Redmond, Washington- based Microsoft, the world’s largest software maker, was over real estate. In 2007, Microsoft signed an agreement to lease additional space in the 17-story building it shares with InterSystems on the bank of the Charles River in Cambridge, Massachusetts.
Ragon sued the landlord, New York-based Blackstone’s Equity Office Properties unit, claiming his company had the right of first refusal on the space, and that EOP and Microsoft conspired to raise rents in the building, according to court documents. The matter was settled out of court in 2009.
Skyline Wars
When Microsoft secured a zoning waiver to put its lighted logo at the top of the building’s facade, Ragon formed a coalition, Save Our Skyline, to lobby the city council to repeal the amendment. The organization painted Bill Gates’s company as a villain. “Once Microsoft sets the precedent, how many more signs will follow?” the group’s website said.Ragon’s group gathered 7,554 voters, 12 percent of Cambridge’s electorate, and got the city council to rescind the permission in 2010. Microsoft later put its logo atop a nearby office building not subject to zoning restrictions.
Ragon has been active in giving to national politicians. In 2004, he and his wife, Susan, donated $3 million to America Coming Together, a political action committee backed that year by George Soros that sought to defeat George W. Bush in the U.S. presidential election. Since then, the couple has donated almost $700,000 to Democratic Party candidates, according to Washington, D.C.-based Center for Responsive Politics.
AIDS Pledge
Donations in this year’s election have been to support Elizabeth Warren, the Democratic challenger to incumbent Republican Massachusetts Senator Scott Brown, and American Bridge 21st Century, a PAC that focuses on fact checking Republican candidate campaign statements.Ragon’s biggest charitable gift has been to fight AIDS. In 2009, he pledged $100 million to Massachusetts General Hospital -- the hospital’s largest gift ever -- to form the Ragon Institute of MGH, MIT and Harvard. The cross-institution organization is dedicated to developing an AIDS vaccine.
According to a rare interview Ragon gave to the Boston Globe in conjunction with the gift, it was a 2007 trip to South Africa arranged by Bruce Walker, an AIDS researcher who now heads the institute, that convinced Ragon he could make a difference.
“You might say back in Newton’s time, you could be a solo physicist conducting research,” the newspaper quoted Ragon as saying. “But today, you need projects where large groups of people come together to focus on advancing the state of science.”
----With assistance from John Lauerman in Boston. Editors: Peter Newcomb, Matthew G. Miller
To contact the reporter on this story: Brendan Coffey in Boston at bcoffey10@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
Hidden Billionaries Dan Cathy and Donald Cathy
Chick-fil-A Inc., the Atlanta-based fast-food chain feuding with gay-rights advocates over some executives' stance on marriage, has served up two hidden billionaires.
The two sons of Samuel Truett Cathy, the chicken sandwich empire’s founder -- Dan Cathy, 59, and Donald Cathy, who is known as Bubba -- have joined the ranks of the world’s richest, according to a report published today by PrivCo, New York-based research firm that specializes in private companies’financial data.
The report values Chick-fil-A at $4.5 billion. Dan Cathy, the company’s president, and Don Cathy, its executive vice president, each own a third of the restaurant chain, according to a person familiar with the company who asked not to be named because it is closely held. Neither has appeared on an international wealth list.
“The sons have been involved in running the company for many years,” said Kenneth L. Bernhardt, a professor at Georgia State University’s business school and a longtime consultant for Chick-fil-A, in a phone interview today. “Dan has had just about every job there is in the company, with a strong focus on operations. Bubba focuses a very large percentage of his time on the company’s philanthropic efforts.”
Gay-rights groups have urged a boycott of the chain and mayors of cities including Boston and San Francisco have spoken out against the company after Dan Cathy took a position against same-sex marriage, the Associated Press reported July 19. He said the company is “guilty as charged” for backing what he called the biblical definition of the family unit, AP reported.
In a statement released today, Steve Robinson, Chick-fil-A’s executive vice president of marketing, said the company will“leave the policy debate over same-sex marriage to the government and political arena.”
The chain has the biggest sales per unit in fast-food, according to QSR Magazine. In 2011, the company generated gross sales of $2.9 million per location, outpacing the average unit sales of runner-up McDonald’s Corp. (MCD) by $400,000, the magazine said in its August 2012 issue.
PrivCo said it valued Chick-fil-A at $4.5 billion using peer multiples of Oak Brook, Illinois-based McDonald’s, Dublin, Ohio-based Wendy’s Co. (WEN) and closely held Wichita, Kansas-based Wil-Ken Enterprises Inc., which operates Popeye’s Chicken and Biscuits restaurants. The calculation factored in the company’s 3-year annual growth rate and Ebitda margins, the report said.
The chicken chain has a value of at least $4.3 billion, according to data compiled by Bloomberg, based on the average enterprise value-to-Ebitda and price-to-earnings multiples of four publicly traded peers: McDonald’s, Wendy’s, San Diego-basedJack In the Box Inc. (JACK) and Louisville, Kentucky-based Yum! Brands Inc. (YUM), the owner of the KFC and Taco Bell brands.
“It is a very impressive business story,” said Sam Hamadeh, CEO of PrivCo, in a telephone interview. “Whatever people think of the politics, when you look at how we quantify the amount of money they are forgoing every year by being closed on Sundays, you have to respect that.”
Truett Cathy keeps Chick-fil-A stores closed on Sundays as“a testament to his faith in God,” according to the company’s website. Jerry Johnston, a spokesman for the company, didn’t return a phone call seeking comment.
The company paid a $191 million dividend to the Cathy family in 2011, PrivCo said.
Dan and Bubba Cathy's sister, Trudy Cathy White, is director of WinShape Girls Camps, an operation of the family’s non-profit WinShape Foundation Inc. that provides camp services for children. She doesn’t appear to be involved in the restaurant operations, according to the company’s website. Her ownership stake of the chain hasn’t been disclosed.
From its southern U.S. base, Chick-fil-A has been expanding north. In 2010, it opened its first Chicago-area locations and has been planning to grow beyond its two franchised locations in the Boston suburbs.
The Cathys haven’t given any indication of wanting to loosen their grasp on the family business. In a 2001 interview with Bloomberg News, S. Truett Cathy, now 91, said, “I would never even think about going public. I think Dan supports me in this. Most companies go public to raise money and grow faster. We’re not interested in either.”
To contact the reporter on this story: Brendan Coffey in Boston at bcoffey10@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
The two sons of Samuel Truett Cathy, the chicken sandwich empire’s founder -- Dan Cathy, 59, and Donald Cathy, who is known as Bubba -- have joined the ranks of the world’s richest, according to a report published today by PrivCo, New York-based research firm that specializes in private companies’financial data.
The report values Chick-fil-A at $4.5 billion. Dan Cathy, the company’s president, and Don Cathy, its executive vice president, each own a third of the restaurant chain, according to a person familiar with the company who asked not to be named because it is closely held. Neither has appeared on an international wealth list.
“The sons have been involved in running the company for many years,” said Kenneth L. Bernhardt, a professor at Georgia State University’s business school and a longtime consultant for Chick-fil-A, in a phone interview today. “Dan has had just about every job there is in the company, with a strong focus on operations. Bubba focuses a very large percentage of his time on the company’s philanthropic efforts.”
Gay-rights groups have urged a boycott of the chain and mayors of cities including Boston and San Francisco have spoken out against the company after Dan Cathy took a position against same-sex marriage, the Associated Press reported July 19. He said the company is “guilty as charged” for backing what he called the biblical definition of the family unit, AP reported.
In a statement released today, Steve Robinson, Chick-fil-A’s executive vice president of marketing, said the company will“leave the policy debate over same-sex marriage to the government and political arena.”
Closed Sundays
Chick-fil-A generated $492 million in earnings before interest, tax, depreciation and amortization on revenue of $1.12 billion in 2011, PrivCo said. It added that the company’s 44 percent Ebitda margin was “virtually unheard of in the restaurant industry.”The chain has the biggest sales per unit in fast-food, according to QSR Magazine. In 2011, the company generated gross sales of $2.9 million per location, outpacing the average unit sales of runner-up McDonald’s Corp. (MCD) by $400,000, the magazine said in its August 2012 issue.
PrivCo said it valued Chick-fil-A at $4.5 billion using peer multiples of Oak Brook, Illinois-based McDonald’s, Dublin, Ohio-based Wendy’s Co. (WEN) and closely held Wichita, Kansas-based Wil-Ken Enterprises Inc., which operates Popeye’s Chicken and Biscuits restaurants. The calculation factored in the company’s 3-year annual growth rate and Ebitda margins, the report said.
The chicken chain has a value of at least $4.3 billion, according to data compiled by Bloomberg, based on the average enterprise value-to-Ebitda and price-to-earnings multiples of four publicly traded peers: McDonald’s, Wendy’s, San Diego-basedJack In the Box Inc. (JACK) and Louisville, Kentucky-based Yum! Brands Inc. (YUM), the owner of the KFC and Taco Bell brands.
“It is a very impressive business story,” said Sam Hamadeh, CEO of PrivCo, in a telephone interview. “Whatever people think of the politics, when you look at how we quantify the amount of money they are forgoing every year by being closed on Sundays, you have to respect that.”
Truett Cathy keeps Chick-fil-A stores closed on Sundays as“a testament to his faith in God,” according to the company’s website. Jerry Johnston, a spokesman for the company, didn’t return a phone call seeking comment.
Northern Expansion
As of Jan. 1, Chick-fil-A said it had a total of 1,615 Chick-fil-A outlets, the majority of which are franchised, according to PrivCo. The company also operates full-service restaurants under two other brand names, Truett’s Grill and Dwarf House.The company paid a $191 million dividend to the Cathy family in 2011, PrivCo said.
Dan and Bubba Cathy's sister, Trudy Cathy White, is director of WinShape Girls Camps, an operation of the family’s non-profit WinShape Foundation Inc. that provides camp services for children. She doesn’t appear to be involved in the restaurant operations, according to the company’s website. Her ownership stake of the chain hasn’t been disclosed.
From its southern U.S. base, Chick-fil-A has been expanding north. In 2010, it opened its first Chicago-area locations and has been planning to grow beyond its two franchised locations in the Boston suburbs.
The Cathys haven’t given any indication of wanting to loosen their grasp on the family business. In a 2001 interview with Bloomberg News, S. Truett Cathy, now 91, said, “I would never even think about going public. I think Dan supports me in this. Most companies go public to raise money and grow faster. We’re not interested in either.”
To contact the reporter on this story: Brendan Coffey in Boston at bcoffey10@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
Hidden Billionarie Pham Nhat Vuong
Pham Nhat Vuong became a billionaire selling a Ukrainian instant-noodle business and creating Vietnam’s biggest property developer.
The 44-year-old chairman of Vingroup Joint-Stock Co. (VIC), which is building eight mixed-use projects in prime locations in Vietnam at a total cost of more than $4 billion, plans to get even richer selling high- and mid-end apartments to Asians who want to reallocate their holdings from cash and gold.
“Vietnamese people still hold a lot of gold as their savings,” Vuong said in an interview at the company’s headquarters in Hanoi. “Vietnamese are very similar to the Chinese. They just can’t sit on gold bars underneath their beds. Eventually they will pull out their gold bars and invest. It will be a boom for the real-estate market.”
Vuong and his wife, Pham Thu Huong, own about 50 percent of Vingroup, Vietnam’s fifth-biggest company by market value. Excluding shares he has pledged as collateral to finance some of the company’s real estate projects, Vuong is worth $1.3 billion, according to the Bloomberg Billionaires Index. He has never appeared on an international wealth ranking.
Vingroup is seeking to raise about $300 million in a share sale in Singapore by August to fund its Vietnamese expansion. The company shelved plans for a Singapore listing last year when the city-state’s benchmark Straits Times Index (FSSTI) fell 17 percent.
“If you give me $10 billion now, I would spend it all on construction because there’s so much more to build,” Vuong said. “There is tremendous demand in Vietnam.”
Vuong studied geological economic engineering at Moscow Geology University in Russia. After school, he moved to Ukraine, where he created LLC Technocom, a producer of more than 100 dehydrated food products, including instant noodles and mashed potatoes.
He sold the company for an undisclosed price to Nestle SA in 2010. Technocom had revenue of more than $100 million at the time of the sale. Based on the average revenue multiple of mergers and acquisitions involving food companies worldwide in 2010, the company could have been valued at $150 million when the billionaire sold the operation to the Vevey, Switzerland-based food company that year, according to data compiled by Bloomberg. Vuong declined to comment on the sale price because of a confidentiality agreement.
Vingroup has controlling interests in 18 mixed-use and resort projects it is building in Vietnam, including in Hanoi, Ho Chi Minh City, Hung Yen and Da Nang. It opened shopping mall Vincom Center A Ho Chi Minh City, which houses luxury names including Hermes and Christian Dior, in the commercial capital earlier this month. Its effective interest in the projects it is building is about 93 square kilometers as of Sept. 30.
Vingroup’s projects in Hanoi, known for its French colonial architecture and tree-lined boulevards, are within 10 kilometers of the city center. The government, which created a market economy with Doi Moi, or economic renovation policies, in 1986, is seeking to develop the capital into a modern metropolis.
At Times City, located in a bustling residential and commercial area in Hanoi, Vingroup opened Vietnam’s first hospital that offers single-patient rooms and presidential suites. The project, scheduled to be completed in 2014, also includes residential blocks, a mall and an international school.
Vuong, a father of three, said he wants to sell a new“living experience” for Vietnamese people.
“We want to bring better products to Vietnam,” he said.“My hope is through changes in lifestyle and the products we consume, it will affect the people and change the way they are thinking. The country will develop further from where it is today.”
Buying land in prime or unique locations has enabled Vingroup to sell its properties at a premium to market rates, even during a downturn, said Phuong Ton, an analyst at Viet Capital Securities in Ho Chi Minh City, who has a “hold”recommendation on the stock. Another key selling point is the developer’s ability to complete its projects within a short period of time, she said.
Vingroup “has a special advantage in terms of capital; that’s why they can target those projects which require a lot of leverage right at the beginning,” Ton said. “Most of the properties that they have introduced in Hanoi and Ho Chi Minh City have incorporated some new development concept in Vietnam.”
The billionaire said he will develop properties outside of Vietnam “when there’s a good opportunity.” He hired McKinsey & Co. this year to conduct a strategic review of Vingroup’s business and advise the company on its future.
“Given their vision, limiting themselves to Vietnam’s boundaries would limit their growth potential,” Viet Capital Securities’ Ton said.
Vuong travels to other cities for ideas. When the developer was building the Vincom Center in Ho Chi Minh City, he organized a trip to Singapore for the complex’s retail tenants, paying for their airfare and accommodation. They went to Ion Orchard, jointly owned by Singapore-based CapitaLand Ltd. and Hong Kong’s Sun Hung Kai Properties Ltd., to study its shop front and other features of the luxury shopping mall.
“He’s very modest and down-to-earth,” said Le Thi Thu Thuy, chief executive of Vingroup and a former Lehman Brothers Holdings Inc. investment banker. “He always tells management to continue learning every day, that you can’t be happy, content with what you already have.”
About 47 percent of households in Hanoi and Ho Chi Minh City earn an average annual income of $7,425, according to property broker CBRE Group Inc.’s local unit, which said it would take 51 years to save enough money to buy a mid-end condominium that would cost $72,000.
The majority of real estate purchases in Vietnam are still made without a mortgage. It would take the average household 242 years to save enough to buy a $342,000 luxury condominium, according to CBRE’s local unit.
Home prices in Ho Chi Minh City surged almost threefold from 2004 to the first quarter of 2008, according to CBRE data. Values then fell as the government raised interest rates and restricted lending for real estate and other non-productive sectors, in a bid to tackle inflation.
The State Bank of Vietnam has lowered its key refinance rate by 500 basis points since March to 10 percent, as annual inflation plunged back toward single digits from a high of 23 percent in August last year.
Vuong, who values discipline and rewards those who do well, upholds a slogan for employees: “Speed, creativity and efficiency in everything you do, in every action.”
The billionaire plays soccer and basketball every week with Vingroup employees at the company’s sports center, often trading his suit and tie for a company soccer team’s red jersey and shorts. He plays the position of striker, whose job is to score goals.
“Attacking is better than defending,” he said, adding that he applies that principle to everything he does.
To contact the reporter on this story: Netty Ismail in Singapore at nismail3@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
The 44-year-old chairman of Vingroup Joint-Stock Co. (VIC), which is building eight mixed-use projects in prime locations in Vietnam at a total cost of more than $4 billion, plans to get even richer selling high- and mid-end apartments to Asians who want to reallocate their holdings from cash and gold.
“Vietnamese people still hold a lot of gold as their savings,” Vuong said in an interview at the company’s headquarters in Hanoi. “Vietnamese are very similar to the Chinese. They just can’t sit on gold bars underneath their beds. Eventually they will pull out their gold bars and invest. It will be a boom for the real-estate market.”
Vuong and his wife, Pham Thu Huong, own about 50 percent of Vingroup, Vietnam’s fifth-biggest company by market value. Excluding shares he has pledged as collateral to finance some of the company’s real estate projects, Vuong is worth $1.3 billion, according to the Bloomberg Billionaires Index. He has never appeared on an international wealth ranking.
Vingroup is seeking to raise about $300 million in a share sale in Singapore by August to fund its Vietnamese expansion. The company shelved plans for a Singapore listing last year when the city-state’s benchmark Straits Times Index (FSSTI) fell 17 percent.
“If you give me $10 billion now, I would spend it all on construction because there’s so much more to build,” Vuong said. “There is tremendous demand in Vietnam.”
Outside Vietnam
The billionaire said he also has plans to build properties in Singapore or Hong Kong, where some of Asia’s biggest developers are based.Vuong studied geological economic engineering at Moscow Geology University in Russia. After school, he moved to Ukraine, where he created LLC Technocom, a producer of more than 100 dehydrated food products, including instant noodles and mashed potatoes.
He sold the company for an undisclosed price to Nestle SA in 2010. Technocom had revenue of more than $100 million at the time of the sale. Based on the average revenue multiple of mergers and acquisitions involving food companies worldwide in 2010, the company could have been valued at $150 million when the billionaire sold the operation to the Vevey, Switzerland-based food company that year, according to data compiled by Bloomberg. Vuong declined to comment on the sale price because of a confidentiality agreement.
Back Home
Vuong returned to live in Vietnam in 2001, when he started resort developer Vinpearl Joint-Stock Co. He set up Vincom Joint-Stock Co., which develops mid- to high-end commercial and residential properties, the following year. Vinpearl and Vincom, both of which were listed, merged to form Vingroup this year.Vingroup has controlling interests in 18 mixed-use and resort projects it is building in Vietnam, including in Hanoi, Ho Chi Minh City, Hung Yen and Da Nang. It opened shopping mall Vincom Center A Ho Chi Minh City, which houses luxury names including Hermes and Christian Dior, in the commercial capital earlier this month. Its effective interest in the projects it is building is about 93 square kilometers as of Sept. 30.
Vingroup’s projects in Hanoi, known for its French colonial architecture and tree-lined boulevards, are within 10 kilometers of the city center. The government, which created a market economy with Doi Moi, or economic renovation policies, in 1986, is seeking to develop the capital into a modern metropolis.
Fengshui Matters
At the mixed-use Royal City project, situated at an old factory site about 5 kilometers from Hanoi’s central business district, construction continues around the clock. Buyers of the high-end apartments, which are being sold at $1,800 to $2,500 a square meter, can adapt the design of their units to suit their“fengshui,” or Chinese geomancy, needs. The project will include the first indoor water park and ice-skating rink in Vietnam when completed next year.At Times City, located in a bustling residential and commercial area in Hanoi, Vingroup opened Vietnam’s first hospital that offers single-patient rooms and presidential suites. The project, scheduled to be completed in 2014, also includes residential blocks, a mall and an international school.
Vuong, a father of three, said he wants to sell a new“living experience” for Vietnamese people.
“We want to bring better products to Vietnam,” he said.“My hope is through changes in lifestyle and the products we consume, it will affect the people and change the way they are thinking. The country will develop further from where it is today.”
Urban Renewal
Vingroup has acquired land from factories that are relocating from central districts to the outskirts of the city as the capital pushes through its urban renewal plan. The company owns about 10,200 hectares of land in prime locations in Hanoi, the southern commercial capital of Ho Chi Minh City, as well as the coastal cities of Nha Trang, Da Nang and Hai Phong.Buying land in prime or unique locations has enabled Vingroup to sell its properties at a premium to market rates, even during a downturn, said Phuong Ton, an analyst at Viet Capital Securities in Ho Chi Minh City, who has a “hold”recommendation on the stock. Another key selling point is the developer’s ability to complete its projects within a short period of time, she said.
Vingroup “has a special advantage in terms of capital; that’s why they can target those projects which require a lot of leverage right at the beginning,” Ton said. “Most of the properties that they have introduced in Hanoi and Ho Chi Minh City have incorporated some new development concept in Vietnam.”
Convertible Financing
The company sold $300 million of convertible bonds to international investors this year. It raised $100 million in the first overseas convertible bond sale by a Vietnamese company in 2009. Vingroup had assets of about $1.7 billion and liabilities of $1.3 billion as of Dec. 31, according to data compiled by Bloomberg.The billionaire said he will develop properties outside of Vietnam “when there’s a good opportunity.” He hired McKinsey & Co. this year to conduct a strategic review of Vingroup’s business and advise the company on its future.
“Given their vision, limiting themselves to Vietnam’s boundaries would limit their growth potential,” Viet Capital Securities’ Ton said.
Vuong travels to other cities for ideas. When the developer was building the Vincom Center in Ho Chi Minh City, he organized a trip to Singapore for the complex’s retail tenants, paying for their airfare and accommodation. They went to Ion Orchard, jointly owned by Singapore-based CapitaLand Ltd. and Hong Kong’s Sun Hung Kai Properties Ltd., to study its shop front and other features of the luxury shopping mall.
Dismantling Rooms
Before building Vinpearl Resort Nha Trang, his first hospitality project, nestled on a private beach by the South China Sea, Vuong visited the hotels in Phuket with a screwdriver stashed in his suitcase. He used the tool to dismantle hotel room fittings -- before reassembling them -- to understand how they were put together.“He’s very modest and down-to-earth,” said Le Thi Thu Thuy, chief executive of Vingroup and a former Lehman Brothers Holdings Inc. investment banker. “He always tells management to continue learning every day, that you can’t be happy, content with what you already have.”
Limited Affordability
The size of Vuong’s target customers is unclear. Vietnam’s urban population is growing 3.4 percent annually, according to the World Bank, with growth fastest in and around the two biggest cities, Ho Chi Minh City and Hanoi. Only about 5 percent of the population in the two largest cities is able to afford homes currently being produced by large developers, according to the lender.About 47 percent of households in Hanoi and Ho Chi Minh City earn an average annual income of $7,425, according to property broker CBRE Group Inc.’s local unit, which said it would take 51 years to save enough money to buy a mid-end condominium that would cost $72,000.
The majority of real estate purchases in Vietnam are still made without a mortgage. It would take the average household 242 years to save enough to buy a $342,000 luxury condominium, according to CBRE’s local unit.
Home prices in Ho Chi Minh City surged almost threefold from 2004 to the first quarter of 2008, according to CBRE data. Values then fell as the government raised interest rates and restricted lending for real estate and other non-productive sectors, in a bid to tackle inflation.
The State Bank of Vietnam has lowered its key refinance rate by 500 basis points since March to 10 percent, as annual inflation plunged back toward single digits from a high of 23 percent in August last year.
Sales Data
Vingroup sold 7,000 to 8,000 residential units at the end of 2010 and early 2011, Vuong said. The apartment units at the Vincom Center in Ho Chi Minh City, which also boasts a spa and fitness center, were sold in 2010 at an average selling price of about $8,000 per square meter, a record in Vietnam.Vuong, who values discipline and rewards those who do well, upholds a slogan for employees: “Speed, creativity and efficiency in everything you do, in every action.”
The billionaire plays soccer and basketball every week with Vingroup employees at the company’s sports center, often trading his suit and tie for a company soccer team’s red jersey and shorts. He plays the position of striker, whose job is to score goals.
“Attacking is better than defending,” he said, adding that he applies that principle to everything he does.
To contact the reporter on this story: Netty Ismail in Singapore at nismail3@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
Hidden Billionarie Eric Sprott
His wealth is not a surprise to anyone in Canada who has watched him prosper,
but investor Eric Sprott is under the radar enough in the rest of the world to
land on a new global list of "hidden billionaires."
Bloomberg Markets magazine ranks Mr. Sprott as one of the globe's unsung billionaires, along with a French advertising heiress, a German appliance entrepreneur and a Moroccan property developer.
Mr. Sprott's wealth is estimated by Bloomberg at "at least $1.3-billion (U.S.)," based mostly on his publicly disclosed holdings in Sprott Inc. and some other Sprott-related companies, including Sprott Physical Gold Trust, stakes that have both hugely benefited from the run in gold. There may be more wealth in other private holdings, acknowledged Matthew Miller, Bloomberg's new billionaire reporter (yes, they have such a thing).
Mr. Sprott met the major criterion for inclusion -- he had not yet appeared on any other rich list.
Mr. Miller in an interview said that he expects to uncover a whole lot more billionaires, maybe not hundreds but definitely "scores," as part of his mandate as head of Bloomberg's new team covering wealthy individuals. The news organization hired Mr. Miller from Forbes and one of his goals is to ferret out stories of wealth that haven't yet been told.
Mr. Sprott's $1.3-billion puts him toward the bottom of the new ranking. Moroccan developer Anas Sefrioui is estimated to have a fortune of at least $2.7-billion, German appliance manufacturer Siegried Meister and his family are reckoned to be worth at least $2.2-billion and Peruvian banking and retail king Carlos Rodriguez-Pastor has collected assets worth at least $3-billion, according to Bloomberg Markets.
Bloomberg Markets magazine ranks Mr. Sprott as one of the globe's unsung billionaires, along with a French advertising heiress, a German appliance entrepreneur and a Moroccan property developer.
Mr. Sprott's wealth is estimated by Bloomberg at "at least $1.3-billion (U.S.)," based mostly on his publicly disclosed holdings in Sprott Inc. and some other Sprott-related companies, including Sprott Physical Gold Trust, stakes that have both hugely benefited from the run in gold. There may be more wealth in other private holdings, acknowledged Matthew Miller, Bloomberg's new billionaire reporter (yes, they have such a thing).
Mr. Sprott met the major criterion for inclusion -- he had not yet appeared on any other rich list.
Mr. Miller in an interview said that he expects to uncover a whole lot more billionaires, maybe not hundreds but definitely "scores," as part of his mandate as head of Bloomberg's new team covering wealthy individuals. The news organization hired Mr. Miller from Forbes and one of his goals is to ferret out stories of wealth that haven't yet been told.
Mr. Sprott's $1.3-billion puts him toward the bottom of the new ranking. Moroccan developer Anas Sefrioui is estimated to have a fortune of at least $2.7-billion, German appliance manufacturer Siegried Meister and his family are reckoned to be worth at least $2.2-billion and Peruvian banking and retail king Carlos Rodriguez-Pastor has collected assets worth at least $3-billion, according to Bloomberg Markets.
Hidden Billionarie Anas Sefrioui
Recent data released by Bloomberg Markets chronicles unmasked the richest entrepreneurs of the world and listed the Moroccan businessman Anas Sefrioui as the country’s wealthiest citizen.
Anas Sefrioui made his way to conquest the billionaires list after he took the real estate Douja Promotion Addoha in 2006.
His 61.74 percent stakes was valued US $2.3 billion in early August this year.
Bloomberg data spoke about real estate industry and disregarded Sefrioui’s profit of other businesses such as maritime transport, chemical industry and paper and cardboard.
Anas Sefrioui was born in Fes in 1957 and left school to work with his father Abdesallam Sefrioui in the industry of “Gassoul” which is a typical Moroccan SPA clay used for cleansing the face, body and hair.
In 1988 Sefrioui founded his own housing business Douja. The business flourished in 1995 when Hassan II, the father of the current king Mohamed VI proposed the creation of 2000 housing properties, the project which was backed by Mohamed VI.
Hidden Billionarie Hamdi Ulukaya
And he's lactose intolerant. All right, so that part probably isn't true, but here's the fascinating story of 40-year-old Turkish immigrant Hamdi Ulukaya, who studied business at SUNY Albany and started making Greek yogurt at a former Kraft factory in Utica, which he purchased with the help of a small-business loan in 2005. Chobani now processes 3 million pounds of milk every day, and revenue has doubled each year since 2009, giving Ulukaya, as the company's sole owner, an estimated worth of $1.1 billion, reports Bloomberg. And now, as the company moves into the retail sector, Ulukaya's ex-wife is suing for 53 percent of the acidophilus.
Hidden Billionarie Alexander Lutsenko
Sodrugestvo Group Co-Founder Alexander Lutsenko is a Hidden Billionarie.
The Sodrugestvo Group was founded in 1994. Originally, the business focused on sales of fodder ingredients, but over the years has acquired the features of a global agro-industrial holding with a yearly turnover of US$2,500 million forecast in 2011-12.
Sodrugestvo is dedicated to offering agricultural markets the highest quality products and services.
Main focuses: • Specialized port infrastructure;
• Specialized logistics;
• Oilseeds and other processing;
• Distribution to farmers.
The Sodrugestvo Group was founded in 1994. Originally, the business focused on sales of fodder ingredients, but over the years has acquired the features of a global agro-industrial holding with a yearly turnover of US$2,500 million forecast in 2011-12.
Sodrugestvo is dedicated to offering agricultural markets the highest quality products and services.
Main focuses: • Specialized port infrastructure;
• Specialized logistics;
• Oilseeds and other processing;
• Distribution to farmers.
Hidden Billionarie H. Gary Morse
Billionaire H. Gary Morse, 75, controls almost every facet of life at the Villages, one of the world’s largest retirement communities.
On a 33-square-mile parcel 15 miles south of Ocala,Florida, halfway between Jacksonville and Tampa, he’s built and sold more than 44,000 homes since 1983. He’s created 39 golf courses and developed 4.5 million square feet of commercial space, including two hotels, 60 restaurants and two movie theaters.
Morse owns the local newspaper, a television channel and an AM radio station. His realty company controls 60 percent of the re-sale market in the Villages, whose commercials have been fixtures on the Golf Channel. His bank lends to retirees fleeing south; his insurance company provides them coverage. He even gets paid to pick up the trash and organize tee times. For all his ubiquity, most outside of Florida have never heard of him.
“He’s kind of like the Wizard of Oz,” Andrew D. Blechman, author of “Leisureville,” a book on retirement communities, said in a phone interview from his office in Great Barrington,Massachusetts “He’s the man behind the curtain. No one really knows him at the Villages.”
In 2011, the Holding Company of the Villages Ltd., which is owned by Morse and his family, generated at least $550 million in revenue, according to regulatory filings. Based on the value of his various businesses and real estate -- plus the almost $1 billion in estimated profits the closely held company has earned over 29 years -- Morse and his family are worth more than $2.5 billion, according to data compiled by Bloomberg. He has never appeared on an international rich list, Bloomberg Markets magazine reports in its July issue.
Morse, who owns at least four jet planes and a 147-foot yacht, has become one of America’s wealthiest real estate tycoons with the help of tax-exempt municipal bonds issued by special government entities he’s created to fund the expansion of the Villages. He plans to use more bonds, which have drawn scrutiny from Florida’s governor and the U.S. Internal Revenue Service, to help fund another 11,000 homes and 4.2 million square feet of commercial space, according to recent bond offering statements.
Gary Lester, a spokesman for the Villages, said in an e-mail that Morse declined to comment for this account.
Florida state law allows for the special taxing districts, including entities known as community development districts, to issue bonds exempt from federal income tax so long as they perform a “wholly public purpose,” according to IRS guidelines.
Suspecting millions of taxpayer dollars were wrongfully flowing to developers, Florida Governor Richard Scott issued an executive order in January 2012, seeking a review of the state’s 1,600 special taxing districts.
“They aren’t elected officials,” Lane Wright, Scott’s press secretary, said in a phone interview when asked about developers requiring homeowner fees to back munis. “They are not accountable to the taxpayer.”
On March 28, 2012, Morse donated $50,000 to Let’s Get to Work, Governor Scott’s 2014 election fund, according to a donor list posted on its website. His three children each donated $10,000 the same day; the Villages made a $100,000 corporate donation as well. Morse is a co-chairman of the Florida finance committee for Republican Mitt Romney’s presidential campaign.
Morse’s community districts have also drawn the ire of the IRS, which has investigated whether $426.6 million of bonds issued between 1993 and 2004 by the Village Center Community Development District should have been tax-exempt, according to letters the agency sent the district’s board of supervisors.
“There is nothing about the establishment or operation of the Center District that indicates it has a wholly public purpose,” the IRS said in a memorandum to the district’s board dated April 26, 2012. “The Center District has in effect been operated as the alter ego of the Developer.”
The IRS memo was in response to the district’s request for“technical advice” into their bonds’s compliance with the tax exemption laws. Dean Patterson, an IRS spokesman, said in a phone interview the agency couldn’t comment on anything having to do with a taxpayer, including special government districts. As of May 17, 2012, the investigation was active, according to a brief sent to the district’s board.
The coupon and principal payments for Morse’s district bonds are made using assessments and amenities fees paid by the Villages’s 84,000 residents who shell out as much as $1,740 a year to enjoy their clubhouses, pools and golf courses. None of the Villages’s special districts have ever defaulted on their bonds.
“That’s your perfect issuer,” Andrew Sanford, an analyst at ITG Holdings LLC, a Naples, Florida-based hedge fund specializing in municipal bonds, said in a phone interview.“They issue bonds. Things get built out very quickly. They have good debt service coverage.”
ITG owns two Village Center bonds with a combined face value of $200,000. The company owns $30 million in municipal securities.
Schwartz moved south and eventually purchased a few thousand acres of scrub land 15 miles south of Ocala, Florida. In 1959, he started selling lots by mail. When federal law banned such sales a few years later, Schwartz sold plots to mobile home owners.
By 1983, only 400 lots had trailers on them. At his father’s urging, Morse moved to Florida that year to take over the business. Rather than hawk vacant lots, Morse decided to build homes -- plus pools, restaurants and lots of golf courses-- on speculation, hoping to sell them to retiring northerners.
By 1986, Morse was selling more than 500 homes a year. A decade later, annual revenue crested $100 million. Between 1986 and the first quarter of 2012, the Holding Company of the Villages generated $8.23 billion in total new home sales revenue.
Based on the average annual profit margin of four publicly traded homebuilders with Florida operations, the company has probably made almost $1 billion in profit from those sales.
When Morse sells the homes, loans to buyers are often made via his $1.4 billion (assets) Villages Bancorporation. A subsidiary, Citizens First Bank, provides consumer-banking services to residents. According to a regulatory filing, the bank was worth $96 million in 2011. Morse and his family own 61 percent of the bank, according to a reply to a IRS questionnairein 2011.
Morse is the landlord of the Villages’s 4.5 million square-feet of commercial space which houses dozens of restaurants, retailers and doctors offices. A few commercial lots have been sold to retailers such as Target Corp. (TGT) The remainder is owned by Morse and his children, according to bond offering documents.
The value of these properties is about $400 million, according to data compiled by Bloomberg. The calculation is based on comparable market data -- vacancy rates, rents, and capitalization rates -- supplied by research firm CB Richard Ellis.
In 2006, Morse transferred most of the direct ownership in the holding company to his three children: Mark Morse serves as President of the company; Tracy Mathews oversees Villages design; and Jennifer L. Parr is a director. Gary Morse retained the largest block of voting shares, and is credited with the family’s fortune, according to the methodology used to compile the Bloomberg Billionaires Indx.
He also has a 147-foot yacht, Cracker Bay according to the Orlando Sentinel and Tampa Bay Times newspapers. The Cayman Islands-flagged vessel can accommodate 12 guests and a full-time crew of nine, according to Charterworld Ltd.
Morse and his family own 40 percent of Lazy B Cattle Ventures LLC. Current and former employees own the rest of the cattle farm, which uses some of the Florida land near the Villages that Morse plans to develop, according to the IRS.
One-third of Morse’s estimated fortune comes from proceeds from selling assets to the Villages with bondholder money. In 1992, Morse created the Village Community Development District No. 1, the first of 11 entities that have issued $1.16 billion in munis, at least $900 million of which has been paid to Morse for assets and services.
In 1993, the Village Center Community Development District issued $26 million in bonds. It used $20.2 million to acquire Sunbelt Utilities Inc., a water utility servicing 5,249 Villages residences, according to the bond offering statement. The district’s board was comprised of Morse and four other Villages employees. Not disclosed in the bond offering statement: the fact that Morse and his father owned Sunbelt, according to Florida state records.
The bond offering included a clause providing $3.69 million in post-sale fees to Morse and his father to connect another 3,351 homes to the system.
Other bond issues show there is no operation at the Villages too small to profit from. In 1996, Village Center CDD raised $17 million to buy assets from Morse, including seven lakes, 12 pickleball courts and 36 holes of golf. The offering included a provision to pay Morse $26,000 annually for taking tee times at those four executive courses.
According to the letter, the IRS said it believed 2003 Village Center Community Development District bonds overpaid Morse for golf courses and other structures. The bonds paid Morse $60 million for amenities that only cost him $7.5 million to build, the letter said.
The IRS also believed some of the assets the district bought from Morse in the 2003 offering were ineligible to be purchased with a tax-exempt bond. One such asset: guardhouses that prevented public access to the Villages even though its roads are public property. At the time, all five members of the district supervisory board were employees of Morse.
The district defended its appraisal methodology, telling the IRS in a subsequent letter that it was buying forward revenues derived from amenities fees in addition to the assets themselves.
The IRS said it also believed Morse violated the intent of the law allowing special government districts by structuring a district with no residents at all and suggested other bonds may be taxable. Florida law indicates developers can create districts -- and appoint their supervisors -- as long as they are 1,000 acres and will eventually reach 250 voters who can independently elect a district board.
The districts were used “to perpetuate this ‘government by developer’ phase indefinitely,” wrote IRS examiner, Dominick Servadio Jr., in a 2009 letter to the Village’s CCD chairman. The May 2012, IRS brief said the agency believed that the 167-acre Village Center CDD and the 432-acre Sumter Landing CDD both failed to meet state requirements to be a district.
Since 2011 another Morse district, the Village Community Development District Number 9, has issued two muni bond offerings. More than $95 million of the $109 million raised went to buy water management assets from Morse.
“The IRS isn’t going to waste its time with the Villages, Dan Carter, President of hedge fund ITG Holdings said in a phone interview. “There are going to be a lot of others that the IRS will have an easier time proving their point with. The Villages is more gray.”
To contact the reporter on this story: Brendan Coffey in Boston at bcoffey10@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
On a 33-square-mile parcel 15 miles south of Ocala,Florida, halfway between Jacksonville and Tampa, he’s built and sold more than 44,000 homes since 1983. He’s created 39 golf courses and developed 4.5 million square feet of commercial space, including two hotels, 60 restaurants and two movie theaters.
Morse owns the local newspaper, a television channel and an AM radio station. His realty company controls 60 percent of the re-sale market in the Villages, whose commercials have been fixtures on the Golf Channel. His bank lends to retirees fleeing south; his insurance company provides them coverage. He even gets paid to pick up the trash and organize tee times. For all his ubiquity, most outside of Florida have never heard of him.
“He’s kind of like the Wizard of Oz,” Andrew D. Blechman, author of “Leisureville,” a book on retirement communities, said in a phone interview from his office in Great Barrington,Massachusetts “He’s the man behind the curtain. No one really knows him at the Villages.”
In 2011, the Holding Company of the Villages Ltd., which is owned by Morse and his family, generated at least $550 million in revenue, according to regulatory filings. Based on the value of his various businesses and real estate -- plus the almost $1 billion in estimated profits the closely held company has earned over 29 years -- Morse and his family are worth more than $2.5 billion, according to data compiled by Bloomberg. He has never appeared on an international rich list, Bloomberg Markets magazine reports in its July issue.
Morse, who owns at least four jet planes and a 147-foot yacht, has become one of America’s wealthiest real estate tycoons with the help of tax-exempt municipal bonds issued by special government entities he’s created to fund the expansion of the Villages. He plans to use more bonds, which have drawn scrutiny from Florida’s governor and the U.S. Internal Revenue Service, to help fund another 11,000 homes and 4.2 million square feet of commercial space, according to recent bond offering statements.
Gary Lester, a spokesman for the Villages, said in an e-mail that Morse declined to comment for this account.
Special Taxing Districts
Since 1992, Morse has raised at least $1.16 billion through 41 tax-exempt bond and note offerings in 11 special taxing districts, according to documents filed with the offerings. The districts use the proceeds to buy assets and services -- such as golf courses and water utilities -- from Morse, who has earned more than $900 million from the transactions.Florida state law allows for the special taxing districts, including entities known as community development districts, to issue bonds exempt from federal income tax so long as they perform a “wholly public purpose,” according to IRS guidelines.
Suspecting millions of taxpayer dollars were wrongfully flowing to developers, Florida Governor Richard Scott issued an executive order in January 2012, seeking a review of the state’s 1,600 special taxing districts.
“They aren’t elected officials,” Lane Wright, Scott’s press secretary, said in a phone interview when asked about developers requiring homeowner fees to back munis. “They are not accountable to the taxpayer.”
On March 28, 2012, Morse donated $50,000 to Let’s Get to Work, Governor Scott’s 2014 election fund, according to a donor list posted on its website. His three children each donated $10,000 the same day; the Villages made a $100,000 corporate donation as well. Morse is a co-chairman of the Florida finance committee for Republican Mitt Romney’s presidential campaign.
Developer’s Alter Ego
One person in the state’s Office of Policy and Budget has been gathering information on the special districts, Wright said. Scott, a Republican, should have an estimate as to how long a thorough review will take by the end of June.Morse’s community districts have also drawn the ire of the IRS, which has investigated whether $426.6 million of bonds issued between 1993 and 2004 by the Village Center Community Development District should have been tax-exempt, according to letters the agency sent the district’s board of supervisors.
“There is nothing about the establishment or operation of the Center District that indicates it has a wholly public purpose,” the IRS said in a memorandum to the district’s board dated April 26, 2012. “The Center District has in effect been operated as the alter ego of the Developer.”
The IRS memo was in response to the district’s request for“technical advice” into their bonds’s compliance with the tax exemption laws. Dean Patterson, an IRS spokesman, said in a phone interview the agency couldn’t comment on anything having to do with a taxpayer, including special government districts. As of May 17, 2012, the investigation was active, according to a brief sent to the district’s board.
‘Perfect Issuer’
A Freedom of Information Act request to the U.S. Treasury Department made by Bloomberg News for more of the correspondence between the district and the IRS was denied April 13, 2012, because tax records are confidential.The coupon and principal payments for Morse’s district bonds are made using assessments and amenities fees paid by the Villages’s 84,000 residents who shell out as much as $1,740 a year to enjoy their clubhouses, pools and golf courses. None of the Villages’s special districts have ever defaulted on their bonds.
“That’s your perfect issuer,” Andrew Sanford, an analyst at ITG Holdings LLC, a Naples, Florida-based hedge fund specializing in municipal bonds, said in a phone interview.“They issue bonds. Things get built out very quickly. They have good debt service coverage.”
ITG owns two Village Center bonds with a combined face value of $200,000. The company owns $30 million in municipal securities.
Real Estate by Mail
Gary Morse was born to Mary Louise and Harold Schwartz. The couple divorced around 1947, when Morse was about 10 years old. Mary Louise remarried Clifford Morse, according to Blechman. The duo raised Gary in Central Lake, Michigan, where the family ran a restaurant and entertainment complex called Brownwood, according to a Jan. 8, 2012, account in Morse’s Villages Daily Sun newspaper.Schwartz moved south and eventually purchased a few thousand acres of scrub land 15 miles south of Ocala, Florida. In 1959, he started selling lots by mail. When federal law banned such sales a few years later, Schwartz sold plots to mobile home owners.
By 1983, only 400 lots had trailers on them. At his father’s urging, Morse moved to Florida that year to take over the business. Rather than hawk vacant lots, Morse decided to build homes -- plus pools, restaurants and lots of golf courses-- on speculation, hoping to sell them to retiring northerners.
By 1986, Morse was selling more than 500 homes a year. A decade later, annual revenue crested $100 million. Between 1986 and the first quarter of 2012, the Holding Company of the Villages generated $8.23 billion in total new home sales revenue.
Based on the average annual profit margin of four publicly traded homebuilders with Florida operations, the company has probably made almost $1 billion in profit from those sales.
Colony Villa
Morse’s fortune was built by owning almost every aspect of the Villages. The Villages builds the homes through subcontractors; a 1,648-square-foot Colony Villa starts at $120,000, while an upgraded 5,139-square-foot Grandview home sells for $1 million.When Morse sells the homes, loans to buyers are often made via his $1.4 billion (assets) Villages Bancorporation. A subsidiary, Citizens First Bank, provides consumer-banking services to residents. According to a regulatory filing, the bank was worth $96 million in 2011. Morse and his family own 61 percent of the bank, according to a reply to a IRS questionnairein 2011.
Morse is the landlord of the Villages’s 4.5 million square-feet of commercial space which houses dozens of restaurants, retailers and doctors offices. A few commercial lots have been sold to retailers such as Target Corp. (TGT) The remainder is owned by Morse and his children, according to bond offering documents.
The value of these properties is about $400 million, according to data compiled by Bloomberg. The calculation is based on comparable market data -- vacancy rates, rents, and capitalization rates -- supplied by research firm CB Richard Ellis.
In 2006, Morse transferred most of the direct ownership in the holding company to his three children: Mark Morse serves as President of the company; Tracy Mathews oversees Villages design; and Jennifer L. Parr is a director. Gary Morse retained the largest block of voting shares, and is credited with the family’s fortune, according to the methodology used to compile the Bloomberg Billionaires Indx.
Cracker Bay
Property records show Morse owns a $1 million house in the Villages. He has four jet planes -- including a 21-seat Dassault Falcon 900 and two 22-seat Dassault Mystere-Falcon 50s, which can fly 3,623 miles without refueling -- owned through the Villages Equipment Co.He also has a 147-foot yacht, Cracker Bay according to the Orlando Sentinel and Tampa Bay Times newspapers. The Cayman Islands-flagged vessel can accommodate 12 guests and a full-time crew of nine, according to Charterworld Ltd.
Morse and his family own 40 percent of Lazy B Cattle Ventures LLC. Current and former employees own the rest of the cattle farm, which uses some of the Florida land near the Villages that Morse plans to develop, according to the IRS.
One-third of Morse’s estimated fortune comes from proceeds from selling assets to the Villages with bondholder money. In 1992, Morse created the Village Community Development District No. 1, the first of 11 entities that have issued $1.16 billion in munis, at least $900 million of which has been paid to Morse for assets and services.
Pickleball, Golf
Each time he created a district to issue bonds, Morse created a five-member board to run the community in lieu of a municipal government. The boards that approved 38 of the bond offerings were staffed almost entirely with his employees at the time the bonds were sold. Three of the Villages’s 41 bond offering statements are not available through the Municipal Securities Rulemaking Board database.In 1993, the Village Center Community Development District issued $26 million in bonds. It used $20.2 million to acquire Sunbelt Utilities Inc., a water utility servicing 5,249 Villages residences, according to the bond offering statement. The district’s board was comprised of Morse and four other Villages employees. Not disclosed in the bond offering statement: the fact that Morse and his father owned Sunbelt, according to Florida state records.
The bond offering included a clause providing $3.69 million in post-sale fees to Morse and his father to connect another 3,351 homes to the system.
Other bond issues show there is no operation at the Villages too small to profit from. In 1996, Village Center CDD raised $17 million to buy assets from Morse, including seven lakes, 12 pickleball courts and 36 holes of golf. The offering included a provision to pay Morse $26,000 annually for taking tee times at those four executive courses.
‘Government by Developer’
The IRS began looking into Morse’s bonds in 2009. Details of the agency’s investigation were revealed when a website critical of Florida development districts posted a letter dated May 4, 2009, from the agency to the Villages.According to the letter, the IRS said it believed 2003 Village Center Community Development District bonds overpaid Morse for golf courses and other structures. The bonds paid Morse $60 million for amenities that only cost him $7.5 million to build, the letter said.
The IRS also believed some of the assets the district bought from Morse in the 2003 offering were ineligible to be purchased with a tax-exempt bond. One such asset: guardhouses that prevented public access to the Villages even though its roads are public property. At the time, all five members of the district supervisory board were employees of Morse.
The district defended its appraisal methodology, telling the IRS in a subsequent letter that it was buying forward revenues derived from amenities fees in addition to the assets themselves.
The IRS said it also believed Morse violated the intent of the law allowing special government districts by structuring a district with no residents at all and suggested other bonds may be taxable. Florida law indicates developers can create districts -- and appoint their supervisors -- as long as they are 1,000 acres and will eventually reach 250 voters who can independently elect a district board.
The districts were used “to perpetuate this ‘government by developer’ phase indefinitely,” wrote IRS examiner, Dominick Servadio Jr., in a 2009 letter to the Village’s CCD chairman. The May 2012, IRS brief said the agency believed that the 167-acre Village Center CDD and the 432-acre Sumter Landing CDD both failed to meet state requirements to be a district.
Settlement Talks
In 2009, the IRS requested a settlement requiring the Village Center and Sumter Landing districts to pay $16.5 million tax on the then-outstanding bonds, refinance $355 million of the bonds through taxable bonds, and to refrain from issuing municipal bonds in the future. The settlement was probably declined given the continuing investigation.Since 2011 another Morse district, the Village Community Development District Number 9, has issued two muni bond offerings. More than $95 million of the $109 million raised went to buy water management assets from Morse.
“The IRS isn’t going to waste its time with the Villages, Dan Carter, President of hedge fund ITG Holdings said in a phone interview. “There are going to be a lot of others that the IRS will have an easier time proving their point with. The Villages is more gray.”
To contact the reporter on this story: Brendan Coffey in Boston at bcoffey10@bloomberg.net
To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net
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