Billionaires back to business

If you want proof of the ability of the rich to ride the economic cycle, then look no further than Forbes magazine’s global billionaires list.

The US economy might be bumping along the bottom and Europe’s financial system might be struggling under a mountain of debt, but it seems the world’s wealthiest have all but forgotten the GFC.

In just 12 months, the total wealth of the members on the billionaires list has leapt from $US2.4 trillion to $US3.6 trillion on the back of surging global sharemarkets and strong growth in Asia.

That’s just $US800 billion below the record set in 2008 of $US4.4 billion and given the global economic recovery is only in its early stages, you’d have to think that the total will only keep rising. The great comeback is almost complete.

The list is a wealth watchers dream (disclosure: I helped put together some of the Australian billionaire valuations) for many reasons and this year there are some great stories, including Mexico’s Carlos Slim snatching top spot from Warren Buffett and Bill Gates and the incredible rise of Brazilian billionaire Eike Batista, whose wealth jumped by an unthinkable $US19.5 billion in one year to $US27 billion.

I also loved the comeback story of Andy Beal, whose fortune jumped from $US750 million to $US4.5 billion in the last 12 months. He decided back in 2004 that his bank would stop buying debt because prices got silly, but by the end of 2007 he was scooping up billions in loans dumped by struggling US banks. The strategy is paying off and Beal Bank’s income jumped 95% in 2009 to $US547 million.

But as always, it is the new names on the list that excite me the most and this year’s crop is impressive: 97 debutants, with 62 of these coming from the Asian region. According to Forbes, most have made their own money rather than inheriting.

Despite these common traits, the variety of sectors and backgrounds in on the newcomers list is what really makes them so interesting. Here are five names to watch in the future:

Horst Paulmann

Chiliean billionaire Horst Paulmann makes the biggest entry to this list with a fortune of $US5 billion. The 75-year-old, who emigrated from Germany as a teenager after World War II, owns Cencosud, one of Latin America’s largest retail conglomerates. Supermarkets, hypermarkets, department stores, malls – if shopping is involved, so is Paulmann. He also played a part in the relief operations following the Chilean earthquake in late February.

Li Shufu

The automotive sectors in the United States and Japan have taken a battering in the last 12 months, but Chinese billionaire Li Shufu proves it is possible to get rich in the car game with a debut fortune of $US1.8 billion. As well as his building sales in China, his company Geely (it means auspicious or lucky in Chinese, according to Forbes) is set to expand overseas by buying the Volvo brand from Ford for $US2 billion.

Li has a great rags-to-riches story. He grew up in a poor rural area, and used some money given to him after he graduated from school to by a camera. He made money by charging villagers for photographs before launching a business stripping previous metals out of old appliances and machinery. Lu would eventually go into making parts, but gave this business back to the Chinese Government after the post-Tiananmen Square massacre crackdown. He eventually started Geely in 1998.

Isaac Perlmutter

You’ve got to a love a turnaround story, and Isaac Perlmutter has one fit for a comic book. In 1993, the former retailer bought Marvel Entertainment Group – home of the Marvel superheroes Spider-man, Capital America and Wolverine – out of bankruptcy. Last year he sold the business to Disney for $US4 billion, taking a whopping $US900 million off the table, plus 20 million Disney shares (worth more than $US600 million). His $US1.6 billion fortune is not bad for an immigrant from Israel who is said to have arrived in America with $US250 in his pocket. The notoriously media shy entrepreneur has been known to turn up to movie premieres in disguise.

Yoshikazu Tanaka

Japanese billionaire Yoshikazu Tanaka is just 33 years old, and the second-youngest self-made billionaire on the list behind Facebook founder Mark Zuckerburg. Like Zuckerberg, Tanaka’s $US1.4 billion fortune comes from social media; in 2004 he started Japan’s second biggest social networking site (in terms of users) which is called Gree. While the company trails the country’s biggest social networking site Mixi in users, it is a far bigger earner, thanks to Tanaka’s focus on mobile games and the sale of virtual accessories (such as clothes) for users’ virtual personalities, called avatars.

According to one profile, Tanaka is such a student of tech success (that’s a nice way of saying geek) that meeting rooms in his Tokyo headquarters are named Sunnyvale (the location of Yahoo’s headquarters) and Mountain View (where you will find Google’s HQ).

Kelcy Warren

The United States still produces the most billionaires on the Forbes list (just over 400) and has also produced a fascinating newcomer in Kelcy Warren. After working with his father as a welder on gas pipelines as a teenager, Warren became an engineer and worked his way through the oil and gas sectors, doing everything from gas trading to oil refining. He bought an oil refining company out of bankruptcy in 1993 for $US3 million and sold it three years later for $US115 million.

He then started Energy Transfers and began buying up gas pipelines. “I like businesses where you can make money when you go to bed,” Warren said in a profile earlier this year. “I hate businesses where you have to be like a lawyer and work billable hours.” Energy Transfers’ growth was turbo charged by the collapse of Enron, which allowed Warren to pick up pipeline assets on the cheap. However, his company had a run in with the US Government’s Federal Energy Resource Commission, which fined the company $US167 million for price manipulation following Hurricane Rita in 2005. The company eventually settled for $US5 million.