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EMERGING MARKETS:
JOINING THE GLOBAL RANKS
OF WEALTH CREATORS
AFRICA , CENTRAL & EASTERN EUROPE, MIDDLE EAST
IN ASSOCIATION WITH:
EMERGING MARKETS:
JOINING THE GLOBAL RANKS
OF WEALTH CREATORS
CONTENTS
CONTENTS
■ Executive Summary.......................................................................................................2
■ Key Findings....................................................................................................................3
■ Introduction.....................................................................................................................4
■ Openness and Social Attitudes ............................................................................5
■ Openness and Social Attitudes: Central and Eastern Europe .................6
■ Openness and Social Attitudes: Africa .............................................................9
■ Openness and Social Attitudes: The Middle East ......................................12
■ Global Citizens ..........................................................................................................14
■ Building a Global Company .................................................................................16
■ Display of Wealth .....................................................................................................20
■ Spending: Investments and Pursuits ...............................................................24
■ Methodology ..............................................................................................................27
■ Appendix: Statistical Information on Ultra High Net Worth Individuals
in Central and Eastern Europe, Africa and the Middle East ............................28
EXECUTIVE SUMMARY
Emerging Markets:
Joining the Global Ranks of
Wealth Creators—Africa, Central
& Eastern Europe, Middle East
analyzes 250 fortunes in these
up-and-coming regions. The
report is also based on interviews with billionaires from
these emerging markets, as well
Forbes Insights and
Societe Generale
Private Banking
would like to extend
their thanks to the
billionaire and
multimillionaire
businesspeople who
shared their time and
expertise with us:
as editors of Forbes local language editions, and Forbes and
■ Sudhir Ruparelia,
Forbes.com wealth analysts.
Doctor of Business
Administration,
Emerging-market fortunes
differ from those in mature mar-
Chairman, Ruparelia
Group, UGANDA
kets in terms of the openness of
ultra high net worth individuals
(UHNWIs) about their holdings
and fortunes, as well as their
countrymen’s attitudes toward
■ Jan Kulczyk, Ph.D.,
Founder and Chairman,
Kulczyk Investments,
POLAND
gathering wealth. Although
entrepreneurs from emerging
■ Victor Pinchuk,
markets have made impres-
Founder of international
sive strides in building global
investment advisory
companies, they are still at a dis-
company EastOne Group
advantage in terms of creating
Ltd., UKRAINE
global brands. Because their fortunes are mostly first generation,
■ Stephen Saad,
the personal money manage-
Co-founder and Chief
ment practices in the emerging
Executive Officer, Aspen
markets are also at an earlier
Group, SOUTH AFRICA
stage than in mature markets.
2 | EMERGING MARKETS
KEY FINDINGS
◆ Businesspeople in the emerging markets of Africa, Central
and Eastern Europe and the
Middle East have joined the
ranks of global billionaires. Some
of the individual fortunes that have been created there, in some cases in just over two
decades, can be breathtaking. However, they
are not yet up to the levels of mature markets,
such as the United States and Western Europe.
◆ The openness of the wealthy
about their fortunes correlates
directly with the attitudes of
their countrymen toward them,
and both of these are lower for emerging markets studied for this report than in
mature markets. The more open the wealthy
are about their fortunes, the more their countrymen accept them.
◆ Attitudes toward wealth and
wealth creation vary greatly
among individual nations. For
instance, although the system change in
Central and Eastern Europe happened
roughly at the same time, the differences
in speed with which particular countries
embraced free markets, as well as their own
national histories, resulted in varied attitudes.
In some countries it is still an uphill battle for
entrepreneurs to convince their countrymen
that wealth creation is a positive phenomenon.
participation in global business as a way to
circle back to their homelands and communities, with which they strongly identify.
◆ Building a top global business
is tougher than joining the ranks
of global billionaires. While a majority of businesses studied for this report are
international, just 6% of the world’s 2,000
largest public companies are owned or coowned by billionaires from Central and
Eastern Europe, Africa or the Middle East.
However, billionaires from these regions
account for 14% of the world’s billionaires.
◆ The wealthy from emerging
markets are slightly more understated than those from mature
markets. However, there are vast differences among emerging countries and
regions with regard to wealth display, with
the Middle East and Russia having the highest levels of display, and Central Europe and
Africa the lowest.
◆ Sports, philanthropy and politics are among the top pursuits
of billionaires from emerging
markets studied for this report.
While some of these pursuits are investments,
and some are philanthropic, the billionaires
are often trailblazers in how they approach
these areas.
◆ The majority (78%) of emerging-market fortunes studied for
this report are first-generation,
with Russia being 100% firstgeneration. The emerging markets’
◆ Technology is seen as the
industry that will vault emerging markets ahead, transforming them
billionaires speak a common, global lan-
need to rely on inexpensive labor or natural
guage of business, but they often see their
resources for growth.
into high-value-added producers who do not
COPYRIGHT © 2013 FORBES INSIGHTS | 3
INTRODUCTION
T
he world is currently going
through twin gilded ages,
points out Chrystia Freeland
in her book Plutocrats, The
Rise of the New Global SuperRich and the Fall of Everyone Else.
For the Western, mature markets, this is
the second time a gilded age is taking place.
The fi rst gilded age happened during the late
Industrial Revolution, in the 19th century. It
is known as the Gilded Age due to the huge
fortunes amassed at the time.
Today many of the countries in emerging
markets are industrializing or have replaced
their planned communist or socialist economies with free, or freer, markets, making the
current twin gilded ages a political phenomenon in regions such as Central and Eastern
Europe as well as Africa. In mature markets much of the engine of the current gilded
age comes from the burst in technological
advancement, which serves as a global economic accelerant for all markets.
In his book The Next Convergence: The
Future of Economic Growth in a Multispeed
World, Michael Spence, winner of the Nobel
Prize in economic sciences, points to the
historic proportions of this convergence in
wealth creation. Back in 1950, 750 million people lived in industrializing countries
and the remaining 4 billion-plus were left
behind, Spence writes.
“Today we are at a midpoint in the process of two parallel interacting revolutions: the
continuation of the Industrial Revolution in
the advanced countries, and the sudden and
dramatic spreading pattern of growth in the
developing world,” writes Spence. “The end
point is likely to be a world in which perhaps
75 percent or more of the world’s people live
in advanced countries with all that it entails.”
This report analyzes this fi rst wave of
wealth creation in several of the world’s
emerging markets—Central and Eastern
Europe, Africa and the Middle East.
Businesspeople in these regions have
joined the ranks of global billionaires. In fact,
some of the individual fortunes that have
been created there, in some cases in just over
two decades, are breathtaking. They are not
yet up to the levels of the largest fortunes in
mature markets, such as the United States
and Western Europe, but they are catching
up fast considering the short timespan since
their inception.
Apart from the size of the fortunes, there
are ways in which going through a burst of
wealth creation for the first time can be a
disadvantage, as emerging markets are still
building regulatory institutions, business
practices and political systems, which mature
markets have been strengthening over the last
century.
AVERAGE SIZE OF FORTUNE OF
THE 20 RICHEST INDIVIDUALS
● United States:
$24.3 billion
● Western Europe:
$20.1 billion
● Russia:
$10.1 billion
● Middle East:
$7.6 billion
● Central & Eastern Europe: $3.2 billion
● Africa:
$2.3 billion
● Turkey:
$2.0 billion
SOURCE: FORBES
The wealth creators in emerging markets
are working at gaining acceptance by their
countrymen. They are competing around
the world to build global brands, investing
to enrich not just themselves but also their
countries, and following pursuits such as
sports and philanthropy. This report looks at
the challenges they face in joining the global
ranks of wealth creators and how they overcome them, as well as the advantages they
have as entrepreneurs from regions where
they have had to be more resourceful in creating their businesses mostly from scratch,
and with fewer models to follow.
OPENNESS & SOCIAL ATTITUDES
“In our continent, a balance
between commercial
success and an investment
back into society is important in
shaping a positive attitude.”
—S TEPH EN SA AD, CEO, A SPEN
G R O U P, S O U T H A F R I C A
O
penness about
b
the
h origin
i i
and size of fortunes is lower
in emerging markets than it
is for ultra high net worth
individuals (UHNWIs) in
mature markets. On a scale from 0 to 10, with
0 being not open at all and 10 being very transparent, the Forbes Wealth Panel assigned the
emerging markets analyzed for this report a score
of 4.2, and mature markets a score of 7.3.
The openness of the wealthy about their
fortunes correlates directly with the attitudes of
their countrymen toward them. The more open
the wealthy are about their fortunes, the more
their countrymen accept them, and vice versa.
In terms of social attitudes towards great wealth,
the gap between the emerging and mature
R ANKED ON A 0-10 SCALE
Openness About Wealth
Mature Markets vs. Emerging
Markets: 7.3 vs. 4.2
Attitudes Toward Wealth Creators
Mature Markets vs. Emerging
Markets: 6.3 vs. 4.1
S O U R C E: FO R B E S I N SI G H TS W E A LT H PA N EL
markets is just two points, with the Forbes
Wealth Panel scoring mature markets at 6.3, and
emerging markets at 4.1.
The reasons for less transparency start with
the origins of many of the emerging-market
fortunes—and the fact that many of them are
still so new that the origins are not forgotten,
mired in history or tempered by the subsequent
philanthropic benevolence of the founders.
Historically, fortunes tend to be built in waves,
brought about by industrial or political revolutions, and their first decades are usually messy.
Industrial revolutions unleash productivity via
new technology; political ones can do the same
thing by loosening the old elite’s grip on an
economy, thus creating fresh space for entrepreneurial activity.
The most successful businessmen who
built their fortunes during the Industrial
Revolution—such as J.P. Morgan or J. D.
Rockefeller—were during their careers referred
to as robber barons, for what their critics perceived as amassing wealth in a way that robbed
the rest of society.
As time goes by and the emerging markets
develop, the biggest fortunes should become more
transparent, which should lead to improvement in
those societies’ perceptions of wealth creators.
Western societies may not be all positive
about their wealthy, even though they have had
the time to get used to the differences in income
levels. But in many emerging countries, especially in Eastern Europe, used to the seeming
equality of socialism, under which everybody
was more or less equally poor, the income gap
between the average population and the very
wealthy—which is currently exacerbated by
hard economic times—is coming as a shock.
OPENNESS & SOCIAL ATTITUDES:
CENTRAL & EASTERN EUROPE
In Central and Eastern Europe: 3.9
In Central and Eastern Europe: 3.8
In Central Europe and Russia, the trigger
for wealth creation was transitioning from
communism to free markets just two decades
ago. The overall score for openness that
Forbes wealth analysts give Central Europe is
3.9, and the social attitudes are at 3.8. There
are vast differences among the countries,
depending on how fast and how masterfully
they handled the transition to free markets
and democracy. Leading the way are countries such as Poland and the Czech Republic,
which get the highest scores, while southeastern Europe is still lagging.
J
an Kulczyk, international
businessman (net worth: $2.7
billion, according to Forbes),
explains his countrymen’s attitude toward wealth creators in
Poland: “Poland is still working its way up,
with the mental heritage from the socialist era but also with great aspirations. Wealth
creators trigger mixed emotions, but I do
not think this phenomenon to be much different from the European average. In recent
years, the middle class has been developing
in Poland, successful people who also work
in other countries, for whom being rich is
not automatically equal with being suspicious. More and more people realize that the
success of entrepreneurs does not only come
down to the matter of personal wealth but
that it also means new workplaces, taxes paid
to the state budget, economic growth, private patronage. To everyone’s benefit.”
Moreover, attitudes toward wealth in
Poland have improved since the early stages
of post-communist fortune creation, when
businesspeople were considered as suspect,
agrees Jacek Pochlopien, deputy editor of
Forbes Poland. “About five to eight years
ago, I realized that something was changing,”
says Pochlopien. “Many Polish people started
to work independently, they became entrepreneurs, so now the attitude of the general
population toward wealth started to change.”
The entrepreneurial bent of the Polish
people has been confi rmed by a Forbes
Insights/ACCA report titled “Nurturing
Europe’s Spirit of Enterprise.”
Based on a survey of 1,245 European
executives, the report found that Polish
respondents were most likely to say that they
had championed an innovation. They were
also more likely to say that they had succeeded
in getting the innovation implemented. UK,
German and Swiss executives were least likely
to say that they had proposed an innovation.
The entrepreneurship of the population correlates with bigger acceptance for the
wealthy in Poland. Pochlopien now ranks
social attitudes toward the rich at 6, while
in 2000 he would have given them a 4: a
two-point rise in a decade.
Victor Pinchuk, a Ukrainian billionaire who—with a net worth of $4.2
billion—was ranked by Forbes as the 255th
richest person in the world in 2012, is well
aware of the tough transition to free markets that some of his countrymen faced
once communism collapsed. “Today in
Ukraine many people struggle to survive.
Older ones often see the breakdown of
the Soviet system as a loss of stability and
security for average people, and therefore a
certain hostility to quickly acquired wealth
is, from their point of view, quite understandable at the first look,” he says.
H
owever, Pinchuk
believes that “Ukrainian
business has played a
very constructive role
since Ukraine became
independent, regardless of mistakes that
have been made. It has worked hard to
create value for society, and it has also
increasingly contributed to solving social
problems. I hope we will manage to convince ever more people,” he adds.
For that to happen “businessmen need
to understand the challenges of society and
contribute to solving them,” he says. He
tries to anticipate changes affecting society, stay ahead of them and help address
them. As an example, Pinchuk gives the new
metallurgical plant his company opened in
Dnepropetrovsk in October 2012: it combines cutting-edge production methods,
measures designed to save energy and protect the environment, investment in staff,
as well as contemporary artworks and social
programs for the district where it is located.
Sums up Pinchuk: “Ukrainian business needs
to communicate better with the society in
which it is embedded.”
In some countries it is still an uphill
battle for entrepreneurs to convince their
countrymen that wealth creation is a positive phenomenon. Iordan Mateev, editor
of Forbes Bulgaria—who also notes the
murky beginnings of some Bulgarian
fortunes—points out that the negative
perception affects all wealthy individuals. “Even the honest businessmen are not
transparent, because the public hates rich
people and believes not one has gotten
rich honestly,” he says.
“In Poland, more and more
people realize that the success
of entrepreneurs does not only
come down to personal wealth,
but that it also means new
workplaces, taxes paid to the
state, economic growth.”
— JAN K U LC Z Y K , CHAIRMAN ,
K U LC Z Y K INVE S TMENTS , P O L AN D
A
lthough the system change
in Central and Eastern
Europe happened roughly
at the same time, the differences in speed with which
particular countries embraced free markets, as well as their own national histories,
resulted in varied attitudes.
In Turkey, being ultra-wealthy was not
considered as compatible with being honest
for a long time—especially during the 1950s
to the 1980s, until Turgut Özal became
Turkish prime minister and then president
in the 1980s and early 1990s. Özal moved
Turkey toward a free-market system, which
enlivened the moribund economy and created boom years for private enterprises. Only
after that did Turkey start to discuss entrepreneurship, accumulation of wealth, growth
and the private sector as positive terms, says
Burcak Guven, editor of Forbes Turkey.
Russia, with 95 billionaires, now trails
only the United States and China, but
Russian people do not have an easy time
adjusting to the new wealth. That’s partly
because Russia had more communist baggage
than other countries. Maxim Kashulinsky,
former editor of Forbes Russia, notes, “In
other parts of Eastern Europe, when the
free market was restored in the beginning
of the ‘90s, there was a part of the population who still remembered that their fathers
or grandfathers had owned businesses.”
Not in Russia, where private ownership of
“means of production” was non-existent for
70 years. “Some people fi nd it hard to accept
the idea that somebody can own a factory, a
bank or even a single store. Also, the massive
privatization of the 1990s is regarded by
many as unjust,” says Kashulinsky.
Attitudes toward the wealthy are further
harmed by the current recession in Europe. Just
as the wave of fortune-building is happening in
these regions for the first time, these countries
are also experiencing for the first time capitalist recessions, for which their populations are
not mentally prepared. Under communism, the
economic hardship seemed constant, but it was
even and predictable. Over the years, people
learned how to handle it and even make do.
But capitalist recessions are unexpected and
have come as a rude shock.
T
he recession in 2009 was
the fi rst capitalist crisis the
Bulgarians have seen, says
Mateev. “Before it, people
thought our growth after
entering the European Union in 2007 was
inevitable until we caught up with the others. There is the social discontent due to
the rise of unemployment. Rich people are
hiding from the public more than ever.”
For instance, even though Forbes Bulgaria
publishes a list of the most influential
Bulgarians, including the country’s wealthiest citizens, Mateev has been unable to
meet the three richest men in the country
despite many attempts to interview them.
Overall, transparency is on the rise in
Central and Eastern Europe, with countries
like Poland and the Czech Republic leading the way. As a result, UHNWIs in these
countries are more forthcoming and assets
are easier to analyze, and their countrymen
are beginning to take pride in them.
AFRICA
I
n the past labeled a “hopeless continent,” Africa is now referred to
as the next Asia and, according to
the World Bank, could be “on the
brink of an economic take-off ,
much like China was 30 years ago and India
20 years ago.”
Economic growth spurs growth in fortunes. At this stage, there are only 16
Africans on the 2012 Forbes world billionaires list of the 1,226 richest people. But
there are also so many up-and-coming fortunes that Forbes has started publishing a
list of the 40 richest Africans. In 2011, the
40 richest Africans were worth $64.9 billion, more than Thailand’s 40 richest but less
than Taiwan’s 40 richest people. In 2012 the
top 40 Africans were worth $72.9 billion,
an increase of 12%. The price of admission
to the 2012 Africa 40 richest list was a net
worth of $400 million.
The Forbes Wealth Panel gave Africa
relatively low scores for openness about fortunes, which correlates with the origins of
the fortunes and the continent’s political and
economic history. It is worth noting that
South Africa received some of the highest
scores on the continent, especially in terms of
transparency, and without it the total African
scores would be significantly lower.
“ Ugandans generally are enterprising people, and success is normally acceptable and accepted.”
— S U D H I R R U PA R E L I A , C H A I R M A N ,
R U PA R E L I A G R O U P , U G A N D A
AFRICA
RRAANNKKEEDD OONN AA 00- -1 100 SSCCAALLEE
In Africa: 3.8
In Africa: 4.1
S
ome of the African fortunes,
especially in industries like
mining and natural resources,
were created during colonial times and apartheid.
That’s not to say that even before the countries gained independence there was no black
entrepreneurship. In an article in Forbes Africa,
South Africa’s first black billionaire, mining
magnate Patrice Motsepe, points to his father,
Augustine, who was in a general dealership
business, as an inspiration. Trained as a lawyer,
Motsepe reached higher than his father ever
could by getting involved in business early on
in the 1990s, when things were opening up. He
bought some marginal mines that were near the
end of their lives, struck deals with the unions
and then opened them up for business.
Africa’s richest man, and the world’s
richest black man, Nigerian Aliko Dangote—
whose net worth is $12 billion, according
to Forbes—also can trace his business roots
back to pre-independence days. His father,
Mohammed Dangote, was a successful businessman and an associate of his maternal
grandfather, Alhaji Sanusi Dantata, according to Forbes South Africa. Dantata and his
brother controlled the trade in kola nuts and
livestock conducted by some 200 agents.
Billionaire Dangote must have inherited
their business genes: he started quite early
himself. At the tender age of eight he used
to give packets of sweets he had made to the
house servants to sell for him.
2013
AFRICA
3
The perception of the links between
business and government in Africa also
shapes attitudes toward the wealthy. Sudhir
Ruparelia, who runs one of Uganda’s largest
privately owned conglomerates, the eponymous Ruparelia Group, has a net worth of
$900 million, making him the 18th-richest African, according to Forbes. Ruparelia
believes that social attitudes toward the
wealthy are split. “There would defi nitely be
some well wishers and some resentments,” he
says. “Ugandans generally are very enterprising people and success is normally acceptable
and accepted.” It’s worth noting that—reminiscent of the example of Poland—he ties
acceptance by the population to the level of
entrepreneurship.
Ruparelia also recognizes the level of
responsibility that comes with money and
keeps a down-to-earth attitude. “One
becomes a role model, and this has its own
social responsibilities,” he says.
There is no escaping economic disparities
in Africa. With a net worth of $975 million,
Stephen Saad, the cofounder of Aspen Group,
was Africa’s 17th-richest person, according to
Forbes. He is well aware of the large disparities between rich and poor on one hand and
the fast-growing middle class on the other
hand. “A successful [business] strategy means
embracing all sectors of the population rather
than targeting the affluent only. I believe
wealth creators who selectively target this
segment only may get a mixed reception,” he
told Forbes Insights.
S
aad is best known for his success in securing voluntary
licenses from global giants like
Glaxo SmithKline to produce
antiretrovirals to fight HIV/
AIDS and for securing U.S. Food & Drug
Administration approval as an antiretroviral
producer under President George W. Bush’s
Emergency Plan for AIDS Relief. The costs
are less than 5% of the pricing in the U.S.,
making these lifesaving medications accessible
for many people in need.
Sums up Saad: “In our continent, a balance between commercial success and an
investment back into society is important in
shaping a positive attitude in society.”
THE MIDDLE EAST
In the Middle East: 3.3
In the Middle East: 4.6
I
n the Middle East the openness of
the wealthy about their fortunes is a
relatively low 3.3, while social attitudes toward the wealthy are more
than a point higher, at 4.6. This
transparency score does not include Israel,
which is otherwise counted in other scores.
Thanks to its robust democracy and stock
market, the transparency scores awarded
Israel by Forbes wealth analysts are so high,
that had these been included in the regional
score, the Middle East transparency score
would have risen to 5.6.
Tatiana Serafi n, a wealth consultant who
has covered the Middle East for Forbes,
notes, “There is little need for transparency
[in the Middle East], as many deals are done
via insular networks. Public markets are not
very liquid. Post 9/11, many Middle Eastern
investors pulled their funds from U.S. and
European markets and invested the money
in the region, creating further distance and
insularity from broader global markets.”
In the Middle East business dealings
and the management of fortunes are often
tied to social and cultural issues, such as
reliance on and trust of family members.
This reliance on and trust of family was
confi rmed by the 2012 Forbes Insights
study sponsored by Societe Generale
Private Banking, “Global Wealth and
Family Ties,” which established that the
Middle East is among the regions with the
highest percentage of businesses run by
families (at 62%, just behind India, where
73% of the largest fortunes are family run).
E M E R G I N G M 2013
ARKETS
THE MIDDLE EAST
13
KETS
T
he relatively high scores for
social acceptance in the Middle
East may be confounding considering the recent Arab Spring,
which was, to a large extent,
caused by the anger of the have-nots and the
lack of economic opportunities for the young.
An article in Zawya, a business intelligence and
news provider based in Dubai, UAE, analyzing the Forbes billionaires list, pointed to the
relative handful of the very rich in the region—
for example, as compared with Russia and
China—and cited overall wealth inequality as
one of the reasons for the Arab Spring in several
Middle Eastern countries, whose governments
do not foster entrepreneurship.
When interviewed by Forbes.com,
Prince Alwaleed bin Talal—with a net
worth of $18 billion, the richest man in
Saudi Arabia—def ined what it means to
be a billionaire in the Middle East in religious terms, adding another, deeper layer to
the understanding of attitudes toward wealth
in the region: “Wealth creation in the Islamic
world is very important because Islam, really,
is a blend of capitalism and socialism. For
example, there’s a verse in the Qur’an that
says, ‘If you thank God, God shall give you
more.’ That’s pure capitalism, obviously. It
says you can earn more. Yet, on the other
hand, Islam has a compulsory tax.…[If you
don’t pay this tax in the Islamic world], that’s
more than a crime. It’s against faith. I take
this issue of wealth creation and paying our
Islamic zakat very religiously. It’s really very
much part of Islam. It says, ‘You can create as much wealth as you want, but be sure
that you abide by the rules and regulations
of Islam that says you have to pay that every
year for the needy, the poor, etcetera.’”
GLOBAL CITIZENS
I
n her book Plutocrats, Chrystia
Freeland writes that the world’s
super-elite “are becoming a trans
global community of peers who
have more in common with one
another than with their countrymen back
home.” She adds that this new super-elite
consists, to a notable degree, of fi rst- and second-generation wealth.
“We have definitely more in common
than not,” Poland’s Kulczyk says, “irrespective
of the object of our activity, business strategies
or latitude. There is no doubt that very active
businessmen work not because they have to
but rather because they want to.”
In the emerging markets analyzed for
this report, the biggest fortunes are indeed
mostly fi rst-generation. This group is led by
Russia, where 100% of the biggest fortunes
have been made by their current owners, in
the aftermath of the fall of communism (see
chart).
But while Russians have the highest
percentage of self-made billionaires, Heidi
Brown, a Russia expert, believes that some
of the Russian entrepreneurs have been held
back by their continued identification with
being Russian—in other words, some of
them may have too little in common with
the trans global community described by
Freeland. “They need to realize that their
wealth makes them part of a global economy,” says Brown. “Some of the most
successful billionaires have realized that,
while Russia may have given them their
wealth, they can use the wealth as a springboard to experience what lies beyond their
homeland.”
The billionaire entrepreneurs Forbes
Insights spoke with for this report drew
distinctions between the business mindsets
specific to their countries or regions versus
how they think when operating globally.
“I am a Polish businessman who carries
out investments globally. I think globally
and act globally,” says Kulczyk. “Poland
has always been and will be important to
me, but today investing requires not only
portfolio diversifi cation but geographical
diversification as well.”
T
First-generation fortunes from emerging markets
EMERGING MARKETS IN CENTRAL AND EASTERN
EUROPE, MIDDLE EAST AND AFRICA
Total For All Three Regions
78%
Russia
100%
Central and Eastern Europe
84%
Africa
74%
Middle East
54%
here are defi nitely national
or regional characteristics in
doing business. South Africa’s
Saad sees the African business mindset as being “less
prescriptive and built more on reaching consensus. Legal challenges tend to be resorted
to only once all other avenues are exhausted.
In trying to reach consensus, it can be frustrating and construed as procrastinating and
indecisive. However, it is generally a positive
and respectful environment.”
“There is defi nitely an African mindset/
business culture,” says Uganda’s Ruparelia.
“People need African exposure to succeed
in Africa.”
Nigeria’s Dangote believes that Nigerians
have a penchant for risk taking, which makes
them natural born entrepreneurs. He told
Forbes Africa that “…a Nigerian, by nature,
does not work for anybody. A Nigerian
will always try to do his best and work for
himself.”
Kulczyk describes the Polish business mindset in the following way: “In my
opinion, entrepreneurship and willingness to
EMERGING MARKETS
GLOBAL CITIZENS
work hard are the qualities that distinguish
Polish people. We are one of the hardestworking nations in Europe.
“Poles were forced to function in crisis for many years, were challenged with the
scarcity of means and resources as well as
unstable conditions. We may jokingly say
that the ability to fight crises runs in our
blood.”
When asked whether he thinks of himself
as a global or a Ukrainian businessman, billionaire Pinchuk explains: “My business is a
globally oriented business based in Ukraine.
This is my country, my society, and we do
not for a moment forget where we are from.
And in all my professional and social projects,
I always follow the goal of strengthening my
country.”
South Africa’s Saad draws a distinction
between business and personal perceptions
as well. In business, he speaks the global
language. “Our industry peer group in pharmaceuticals is global,” he says, “and local
players tend to be almost exclusively local. So
there is more commonality when discussing
global issues with global peers.”
B
ut his inspiration comes
from South Africa. “I have
been blessed to have so
many role models within
South Africa who have
achieved greatness despite huge socioeconomic challenges. Their leadership,
determination and example, although not
industry specific, helps defi ne the perseverance required to be successful, both locally
and globally.”
“Every person is an individual with their
own personality and business acumen,” says
Ruparelia. “I am in touch with my countrymen.” Born in Uganda, Ruparelia moved
to the United Kingdom with his parents
at age 16 after President Idi Amin expelled
all Asians from the East African country in
1972, but he came back in 1985. “I think of
myself as a Ugandan Asian,” he stresses.
MARKETS
“We need to understand that
competition for resources
and clients is not with
competitors from across
the street or from another
city, but with millions
of businesses around the world.”
—VIC TO R PI N CH U K , FO U N DER ,
E A S TO N E, U K R AI N E
So while Freeland may be right that in
terms of business the world’s billionaires
speak a common language, they often see
their participation in global business as a way
to circle back to their homelands and communities, with which they strongly identify.
BUILDING A GLOBAL COMPANY
E
xpanding their companies globally—either being able
to compete on a global scale or creating global brand
names—is what gains businessmen from emerging markets
the most admiration by the Forbes Wealth Panel. It is a tall
order. “They are very clever, innovative entrepreneurs,”
says Forbes Poland’s Pochlopien. “Sometimes they are not able to compete
with global players, because they founded their companies no more than
20 to 25 years ago and need some experience.”
Jan Kulczyk is one of the businessmen who has successfully created a
global business empire, which operates in 22 countries on four continents.
In 2007, he created Kulczyk Investments, an international investment
house with an international team and management board. The fi rm made
its fi rst investments in oil and gas and other minerals, and it has opened
offices in London, Kiev, Warsaw and Dubai. The company is the most
active Polish investor in Africa, which Kulczyk sees as the world’s most
abounding region as
far as mineral resources
are concerned.
How many billionaires from emerging markets
“Coming from an
own companies that operate internationally?
emerging market is
defi nitely a disadvantage,” says Uganda’s
EMERGING MARKETS IN CENTRAL AND
Ruparelia, citing lack
EASTERN EUROPE, MIDDLE EAST AND AFRICA
of access to capital,
Total For All Three Regions
slow Internet con71%
nections, inadequate
infrastructure and the
Central and Eastern Europe
speed at which the
74%
government moves in
Africa
its service delivery as
72%
challenges.
But Kulczyk
Middle East
points to the advan61%
tages of coming from
Central Europe: “This
experience is invaluable. In Central and
Eastern Europe, we have created a very efficient and confl ict-free
transformation model that would allow a thorough, fast and effi cient transition from a state-owned economy to a free market. Let me
remind you that I come from a country that has been in permanent
crisis for over 50 years. After 1989, we underwent a crash course in the
free market economy. We had to be adventurous and bold in order to
take the future in our hands. Of course, we also made mistakes, but we
knew how to learn from them, and that is why the whole process resulted
in a great success. I have learned from this how to be flexible in reacting to changes. It has also taught me perseverance and the ability to create
long-lasting relationships with prestigious partners, as well as how to see
and use opportunities. [This experience] is invaluable capital, which definitely helps me fi nd my way in other markets, especially in developing
countries, for instance, African ones.”
Even though many of these emerging-market businesses were started
E M E R G I N G2013
MARKETS
M13A R K E T S
Global Company Owners
6% of the world’s 2,000 largest public companies are
owned or co-owned by billionaires from Central and
Eastern Europe, Africa or the Middle East
Billionaires
14% of the world’s billionaires
come from Central and Eastern Europe, Africa or the
Middle East
SOURCE: FORBES
only two decades ago, and despite the challenges they face, a majority of them can be
classified as international, meaning that they
operate outside their own and adjacent countries (chart, page 16).
Joining the ranks of the world’s richest people on a local or regional basis seems
easier than creating or co-owning a top
global company. Individual billionaires
from the emerging markets studied for this
report account for 14% of the world’s billionaires, but these individuals own or co-own
just 6% of the world’s 2,000 largest public
corporations.
No wonder then that global reach is a holy
grail, gaining respect and admiration. The
proof of just how difficult it is to create a global
brand is the Forbes list of the 100 most valuable
brands. Topped by Apple, a brand estimated
by Forbes to be worth $87 billion, and ending
with Kleenex, which clocks in at $3 billion, the
list includes no brands from any of the emerging markets analyzed for this report.
Creating a new brand, technology or
design depends on the level of innovation in a given country or region, which in
turn requires openness of the economy, pay
incentives, fi nancing opportunities for entrepreneurs (such as angel investors and venture
capitalists), as well as an education system
fostering critical thinking, inquisitive minds
and creativity. Developing all of the above
takes time and experience.
The Global Innovation Index, published
by INSEAD and the World Intellectual
Property Organization (WIPO, a specialized agency of the United Nations), does
not list any of the countries studied for this
report among the top 10 innovative countries. The highest position, number 17 on
the list, is achieved by Israel. Also in the top
30 are Estonia (19), Slovenia (26), the Czech
Republic (27) and Latvia (30).
Maxim Kashulinsky, former editor of
Forbes Russia, believes that the lack of global
experience is a shortcoming of Russian business. He points out that there are hardly any
Russian brands or companies with international scale. Russian Standard vodka and
Beeline, he says, are rare examples of Russian
brands that are known globally. (Beeline is
one of the brands of OJSC VimpelCom, one
of the world’s largest integrated telecommunications services operators, which covers
Expanding their companies globally is what gains businessmen from
emerging markets the most admiration by the Forbes Wealth Panel.
territory in Asia, Europe and Africa and has
209 million subscribers.)
Ukraine’s Pinchuk stresses the importance
of a global business mindset: “We need to
understand that competition for resources and
clients is not with competitors from across the
street or from another city, but with millions
of businesses around the world. Global thinking in developing innovative approaches and
efficient business processes is crucial.”
Uganda’s Ruparelia puts international
expansion in perspective when he says: “I
personally think there is enough to do in
Africa. So it’s best to concentrate in Africa,
but with a global outlook and awareness.”
Forbes Turkey’s Guven also points to the
achievements of billionaires whose companies have flourished beyond Turkish borders.
Among them is Turkcell, founded by
Mehmet Emin Karamehmet, a mobile phone
operator and the fi rst Turkish company
listed on the New York Stock Exchange.
Another international Turkish company is
Tav, founded by Sani Sener. Tav operates the
Ataturk airport in Istanbul, as well as airports
EM
18E| REMERGING
GLOBAL
GING M
WEALTH
A
MARKETS
R K EAND
T S FAMILY TIES
in several other countries, including the
Prince Mohammad Bin Abdulaziz airport in
Saudi Arabia, as well as the Riga and Tbilisi
international airports. Turks are also proud
of Vestel Group, a maker of home appliances,
whose television sets are sold all over Europe.
I
n Africa, Nigeria’s Dangote is
admired for international expansion.
His Dangote Group—a cement,
sugar-refi ning, flour-milling and
salt-processing conglomerate—has
the biggest cement plant in the Southern
Hemisphere, with operations in 14 African
countries and plans to open cement plants in
Myanmar and Iraq. “He is well on the way
to realizing his dream of an African multinational,” says Chris Bishop, editor of Forbes
Africa. Dangote is planning to list the company on the London stock exchange this year
and gain further international exposure.
In the Czech Republic, Forbes Czech
editor Petr Simunek also sees global operations as an achievement. He quotes the
example of Petr Kellner, who with a net
worth of $8.2 billion is the Czech Republic’s
richest man. Kellner continues to expand his
insurance and banking empire. His company,
Home Credit, a lender, is expanding business
in China while also launching new projects
in India and Indonesia. Kellner also has big
retail plans in Russia, where he purchased
the remaining 50% stake in electronics
retailer Eldorado.
Simunek also points to two other successful Czech brands that have made it
internationally. They are computer antivirus companies AVG Technologies (listed on
the New York Stock Exchange) and AVAST,
which are among the world’s biggest companies in their field.
I
n Israel as well, Boaz Bin-Nun,
former editor of Forbes Israel,
credits “those who were innovative, consistent and [have stuck to
a] relatively narrow line of business, such as high tech.” Boaz Bin-Nun
points to the importance of a focused business and building a company organically for
a long time based on innovation, as opposed
to buying up many companies with lots of
debt (and often attempting to restructure that
debt).
Among the Israeli brands and companies
bin Nun defi nes as innovative is Mellanox
Technologies, a leading supplier of interconnect solutions for servers and storage
systems, which is listed on both Nasdaq and
the Tel Aviv stock exchange. Other innovative entrepreneurs, according to Bin-Nun,
include Gil Shwed (net worth $1.9 billion), founder of Check Point Software
Technologies, the world’s leader in Internet
security products, and SanDisk cofounder Eli
Harari, an Israeli engineer whose inventions
allow the use of fl ash memory in smartphones and digital cameras.
J
ust like in mature markets,
technology is seen as the industry that will vault emerging
markets ahead, transforming
them into high-value-added
producers who do not need to rely on
inexpensive labor or natural resources for
growth. So far, perhaps the most visible
claim to glory from the emerging markets in terms of famous technology brands
is Skype. Even though the service was
founded by Swedish and Danish businessmen, it is the Estonians who developed the
actual technology. (No wonder then that
Estonia is ranked a high 19 on INSEAD and
WIPO’s Global Innovation Index.)
Pinchuk also wants his country,
Ukraine, to participate in the global technology boom. He created the Internet
business incubator EastLabs to leverage
the country’s great engineering tradition.
“Using, as in other areas of our business,
innovation as a principle, we are, I hope,
creating a center of energy for the future
economy of Ukraine,” he says.
DISPLAY OF WEALTH
T
he level of wealth display, as well as its forms,
varies by region and individually. Overall, the wealthy
in mature markets (North
America and Western Europe) like to display
their riches slightly more than their counterparts in emerging markets analyzed for this
report. In terms of wealth display, the Forbes
Wealth Panel awarded mature markets 6, and
emerging markets 5.3, on a scale from 0 to
10, with 0 being very discreet about wealth
and 10 being total display.
There are, however, vast regional differences among emerging markets. The Forbes
Wealth Panel ranked the wealthy in Africa
and Central Europe as the most understated, awarding them the rank of 4.5 and
4.6 respectively. Russia received a 7, and the
Middle East proved to be the most open in its
wealth display, at 8 (see table, page 21).
How do the international editors of
Forbes explain the reasons for these differences in approaches to the display of wealth?
In Central Europe there is a culture of
relative discretion, which Serafi n says may
still be a remnant of socialism, and on the
surface at least, the face of egalitarianism.
Under communism, social status was usually
signaled not by income but by perks associated with high-ranking membership in the
Communist Party. For those outside the
political system, the status came from education and elevated, often academic, titles.
The relative restraint of Central
Europeans may be a vestige of associating
social status with non-material aspects. It
is merely relative though, as ultra-wealthy
Central Europeans also favor expensive cars,
and show their houses or private planes in
magazines.
In some countries, adds Serafi n, the discretion is based on safety concerns, to the
point of “hiding.” For example, the Czech
Republic’s Petr Kellner closely guards any
photos of himself and never allows any of his
family to be taken.
On top of that, the current economic
recessions have strengthened the reluctance
of the wealthy to show off their wealth. Says
Forbes Bulgaria’s Mateev: “Some of them
used to display their wealth, but after the crisis started, in Bulgaria at the end of 2008,
they realized how annoying this is to the
people, and now they are more discreet about
their wealth.”
Not all displays of wealth seem to be
viewed negatively. While cars and mansions
may be perceived as gaudy, art collections,
especially of national treasures, are perceived as enriching the culture. Perhaps their
countrymen view the wealthy as curators of
national heritage, who win renown and recognition for the country’s achievements.
DISPLAY OF WEALTH
Display of Wealth
Mature Markets (United States and
Western Europe): 6
Emerging Markets of Europe,
Middle East and Africa: 5.3
Middle East: 8
Russia: 7
Central Europe (without Russia): 4.6
Africa: 4.5
SOURCE: FORBES INSIGHTS
W E A LT H PA N EL
But the idea of ownership of art is a
new concept, as under communism art was
thought of as belonging to all people (government) and displayed in museums. For an
individual to own part of that national treasure was deemed impossible, just the way an
individual cannot own a part of history.
In Bulgaria, Vassil Bozhkov, who controls Nove Holding, an insurance and
gambling conglomerate, established the
Thrace Foundation in 2004, introducing the
concept of private art ownership. “By creating Vassil Bozhkov Museum we succeeded
in changing the traditional opinion that the
museum work belongs only to the government,” says the mission statement on the
foundation’s website.
Ukraine’s Pinchuk also sees his wealth as
a means to foster national culture. Says he:
“I do not hide my wealth, but I do not show
it off, and most importantly I try to use it
for improving society. The more you own,
the more you can do for your country. For
example, I am proud that each day around
2,000 mostly young Ukrainians come to see
for free top exhibitions of contemporary art,
including works from my art collection in
the Pinchuk Art Centre in Kiev.”
Equally important, Pinchuk’s foundation not only propagates national art, but also
directly introduces Western achievements by
bringing to Ukraine singers like Elton John
and Paul McCartney, as well as visionaries
like Bill Clinton and Shimon Peres, to share
their inspiration with Ukrainian citizens.
Russia’s billionaires, however, have
become known as keen consumers of luxury brands, which are actively courting
this top clientele. Back in 2006, the famous
Millionaires Fair in Moscow included the
world’s most expensive phone—a diamondencrusted model by the Swiss company
DISPLAY OF WEALTH
Goldvish for €1.4 million—and the most
expensive car in the world, the Bugatti
Veyron, also priced at €1.4 million. The
French cosmetics company Guerlain specially
made perfume for the fair: one bottle priced
at €35,000, according to the press accounts.
M
aybe the spending spree
is the reaction to the longest and most ideological
period of communism in
Eastern Europe, or the
notion that as inhabitants of an empire, they
are expected to live on a grander scale. Some
believe that the volatility of Russian history
has made Russians live for the day, and spend
freely. A deeper historical interpretation may be
that sitting on the outskirts of Western Europe,
the empire felt the need to compete with
Western achievement on a grand, Eastern scale.
But the Russians may have already reached
their climax in spending. Kashulinsky points
out that the wealth display in Russia is less visible nowadays and attributes this change to the
emergence of more very rich officials and top
managers of state-controlled companies, who
tend to be very discreet. The private sector
simply follows the trend. Also, the billionaires
are becoming older and more conservative,
notes Kashulinsky.
Last year, it was a Russian oligarch,
Vladimir Potanin, whose net worth Forbes
estimates at $14.5 billion, who spoke to
Reuters and expressed his disapproval of the
ostentation that accompanied the arrival of
22 | EMERGING
GLOBAL WEALTH
MARKETS
AND FAMILY TIES
Russia’s billionaire barons onto the world
stage. According to Reuters, Potanin said,
“The new cool for real oligarchs is a much
more modest mingling among the population
at large.…It is not good to demonstrate your
luxury and your wealth: to rub it in the faces
of others is insulting.”
Interestingly, according to the same
Reuters article, “Potanin’s privileged upbringing as the son of a high-ranking Soviet trade
official and an education at Moscow’s elite
diplomatic academy have always set him apart
from some of the more showy tycoons.” Thus,
just like in the rest of Central Europe, status is
not limited to material goods only, but is also
afforded by education, which in turn also to
some degree shapes spending patterns and the
display of wealth.
I
n Russia’s southern neighbor,
Turkey, there are three types of
ultra-rich individuals when it comes
to displaying wealth, says Forbes
Turkey’s Guven. The fi rst group
are the “old rich,” which means the time
of their accumulation of wealth is relatively
“old,” like in the ‘70s, ‘80s and ‘90s. Their
companies are nowadays usually run by the
second or third generation. They typically do
not like to display their wealth. Furthermore,
as they are some of the best-known business names in Turkey, they are careful about
wealth display due to security reasons,
because they have always been targets of
kidnapping and blackmail.
DISPLAY OF WEALTH
The second group are the ultra wealthy
who have acquired most of their wealth
after 2004. They are usually from a Muslim
conservative background. Some are from relatively less developed, rural parts of Turkey,
not a big metropolis such as Ankara, Istanbul
or Izmir, according to Guven. One of the
reasons they do not like to show off their
wealth is their conservative Islamic background. There is a well-known saying: “you
should never be able to tell who has money
and who is a true believer.” We can understand from this that faith and wealth should
not be fl aunted.
T
he third group are the recent
entrepreneurs, many of them
young, who are not coming
from a conservative background but are on good terms
with the government, and show that they
respect the Islamic way of life. They enjoy
displaying their lifestyle, talking about their
accomplishments and next projects. They
like to show off both their money and their
capacity to make money.
South Africa’s Saad takes a philosophical
approach when he says he is not comfortable
displaying wealth. “We have very humble
beginnings at Aspen. We also realize how
close the line between success and failure
really is. The reality of life is that you come
into the world with nothing and you will
leave it with nothing. A safe never follows a
coffi n. A display of contribution to society is
both more fulfi lling and rewarding.”
I
ga Motylska, sub editor of Forbes
Africa, sums up: “While the rich
do live the good life and in the lap
of luxury, I would say that they are
rather discreet and humble. Also
perhaps, they are aware that were they to
excessively flaunt their wealth, they would
make themselves an easier target of crime.”
They are prudent to be discreet. Last year kidnappers snatched the 84-year-old mother of
Tony Elumelu, a Nigerian multimillionaire
banker. She was rescued four days later and
arrests were made, according to Forbes Africa.
Forbes contributor Mfonobong Nsehe
writes on Forbes.com that “when it comes to
billionaires splurging on toys, Africa’s richest
are not as ostentatious as their foreign counterparts. Africa’s richest folks are a bit more
modest.”
The Middle East comes in with the
highest score for wealth display. Interestingly,
while the Arab countries and Israel differ
in other categories, they are all consistently
high in terms of wealth display.
The Middle East is known for wealth display at every level: individual, country-based
and global.
In terms of country-based display, the
United Arab Emirates boasts the world’s tallest
building, the exquisite Burj Khalifa, and a couple of man-made islands, including one shaped
like a palm tree. Globally too, Middle Easterners
are snatching the most luxurious brands, such as
British luxury retailer Harrods, now owned by
Qatar Holding, which bought it from Egyptian
Mohamed Al Fayed several years ago.
SPENDING: INVESTMENTS AND PURSUITS
I
n mature markets, there is a
culture of family offices, in particular for multigenerational
family fortunes, which help
ultra-wealthy families with their
money management. Traditionally, the
interest in family offices and private banking spikes with intergenerational wealth
transfers. This stage is only beginning in
many emerging markets, where most billionaires are still fi rst generation.
The necessity for such legal and fi nancial vehicles became painfully apparent
several years ago when a Polish multimillionaire died suddenly, and his fortune
passed on to his son from his fi rst marriage, which led to a lawsuit by the
deceased millionaire’s current partner.
The case was publicized by the media,
and drew the attention of other ultra
wealthy to the need for organized wealth
planning and management.
Often billionaires from emerging markets work with private bankers
from mature markets, who have a leg up
in terms of experience in dealing with
private clients. While family offices in
emerging markets such as Central Europe
do exist, they are not yet a common practice. Sometimes they are set up offshore.
Turkey may be among the most developed among emerging markets in terms
of family offices. In fact, Forbes Turkey’s
Guven says many major families use family offices. She adds that real estate and
stock market investments are the most
popular forms of investment in Turkey,
and that Turkey—as well as the regional
Turkic Republics—is the main investment
destination for the rich. Internationally,
investments in Russia, the Balkans and the
Middle East are also popular.
In the Middle East, the wealthy tend
to invest in tangible ventures such as
property, partnerships, commercial ventures or trading, but nothing that pays
interest, of course, says Refaat Jaafar,
former editor of Forbes Arabia and business presenter at Sky News Arabia.
Internationally, he adds, the most popular
markets are developing countries. Also,
some of the wealthy invest in properties
such as hotels in the United States and
Europe.
In Central and Eastern European
countries, personal investing by the
wealthy is tied to the level of the development of their economies and the
perceived safety of their assets. Forbes
Poland’s Pochlopien says that most ultra
wealthy invest within the country, except
for international vehicles managing their
private money, for which the most attractive foreign investments are real estate in
Europe and all over the world.
I
n Bulgaria, the most visible
investments of the ultra wealthy
are sports teams and media. Not
many look at the Bulgarian stock
market, but some of them invest
in the stock market abroad, says Forbes
Bulgaria’s Mateev.
In Russia, according to Kashulinsky,
the wealthy favor real estate and bank
deposits. Some of them invest in
Internet companies, and there are art
lovers, of course.
N ot a b l e I nve s t m e n t s a n d
Pursuits
Sports: 39
Philanthropy: 35
Politics: 27
Arts: 23
Real estate: 14
SOURCE: FORBES INSIGHTS
RE SE ARCH OF 250 U H NWIS
I
n Africa, Forbes.com contributor Nsehe says that among
ultra-wealthy Nigerians real estate
is the preferred asset class. The
wealthy invest their money both
within the country and internationally, with
the wealthiest Nigerians showing a preference for London and South Africa. South
Africa’s Saad says that he invests in the stock
market, with his largest asset being his shares
in Aspen, as is often the case with billionaires
running public companies.
Ukraine’s Pinchuk believes that contemporary art is a great investment, because
it is an enormously profitable investment in
Ukrainian society. “What better investment
could you imagine than one where the ROI is
thousands of young Ukrainians every day who
stand in line in front of our museum?” he asks.
Pinchuk draws attention to the fact that
sometimes, however personal wealth is spent
or invested—whether on art, a sports team
or philanthropy—it’s hard to classify such
spending as a pure money-making investment, pursuit of one’s passion or a desire to
benefit society.
Sports are among the top investments
and pursuits among billionaires from emerging markets. According to Forbes, Russian
billionaire Mikhail Prokhorov (the 58thrichest man in the world, with a net worth of
$13.2 billion, according to Forbes), owns the
Brooklyn Nets, an American basketball team.
Another Russian, Roman Abramovich (the
68th-richest man, with a net worth of $12.1
billion) owns UK’s Chelsea soccer team,
and South Africa’s mining magnate Patrice
Motsepe (net worth $2.65 billion) controls
a South African football club, Mamelodi
Sundowns, which plays in the South African
Premier Soccer league.
Do billionaires buy sports teams to make
money, or to gain the instant international
visibility that a well-known team affords, or
purely for their passion for sport?
“There is always a certain level of vanity to buying a sports team,” says Kurt
Badenhausen, a Forbes senior editor and
expert on international sports team valuations. “You do not do it if you want to stay
under the radar. That said, there are wildly
divergent reasons for buying a team. Some
do it to make money, many do it for ego
and to rub shoulders with jocks, some do it
for programming for their media interests.
“For super wealthy guys, owning a
sports team is the ultimate toy, but they
vary tremendously on how closely they
watch the bottom line. Making money in
sports is usually about asset appreciation and
not the yearly cash flow,” he adds.
Politics has also been the pursuit of the
ultra wealthy in emerging markets, just as it
has been in mature markets. Money helps,
but it is by no means a guarantee of winning an election, as shown by the example
of American multimillionaire Mitt Romney,
the Republican presidential candidate who
lost in 2012 to Barack Obama. Some of the
rich, such as Russia’s Mikhail Khodorkovsky
and Ukraine’s Yulia Tymoshenko, paid a
high price for their forays from business into
politics. Both are currently jailed. Other
billionaires continue to engage in politics.
Naguib Sawiris, Egyptian telecommunications billionaire, founded the Free Egyptians
Party in the aftermath of Egypt’s revolution.
Philanthropy is also at the beginning
stages in the emerging markets. While philanthropy in itself is a charitable and not a
money-making endeavor, it is interrelated
with wealth management. In mature markets
the charitable foundations of wealthy families
are often handled by their family offices, who
advise families on intergenerational wealth
transfer. They may advise on choices such as
whether to involve descendants in existing
charities, or they may offer to fund charities
chosen by descendants.
B
ringing the circle of sports
and philanthropy together,
South Africa’s Saad manages
to combine his passion for
sports and charity into one
endeavor. In April he raised $1.1 million for
pediatric healthcare for the children of Africa
in the Aspen Trans Karoo cycle challenge by
cycling 240 kilometers off-road in 16 hours
through rugged terrain.
Ukraine’s Pinchuk founded an NGO,
Yalta European Strategy. Every year in Yalta
global decision makers discuss the challenges
of tomorrow and Ukraine’s place in Europe.
Among others, Tony Blair, Bill Clinton,
Shimon Peres and Richard Branson have
spoken there with Ukrainian leaders and
students. Pinchuk says that the goal of his
philanthropy is to empower the next generation to change their country and the world.
METHODOLOGY
T
he information in this study is based on an exclusive
analysis of 250 ultra high net worth individuals in 22
countries in Central and Eastern Europe, the Middle East
and Africa. The average fortune of the 250 individuals studied for
the report was $2.8 billion. Forbes Insights also conducted surveys
and interviews with two dozen editors or former editors of local
language editions of Forbes, as well as Forbes wealth analysts and
independent wealth analysts (the Forbes Wealth Panel).
Forbes Insights would like to extend thanks to the following
wealth analysts for their assistance with this report:
Boaz Bin-Nun, former editor of Forbes Israel, international business consultant
Chris Bishop, managing editor, Forbes Africa
Heidi Brown, freelance writer, Russia expert
Kerry Dolan, senior wealth editor, Forbes
Michel Lobe Ewane, deputy editor in chief, Forbes Afrique
Burcak Guven, editor in chief, Forbes Turkey
Refaat Jafaar, former editor in chief, Forbes Arabia;
business presenter, Sky News Arabia
Maxim Kashulinsky, former editor in chief, Forbes Russia; Web publisher Slon.ru
John Koppisch, deputy editor, Forbes Asia
Luisa Kroll, senior wealth editor, Forbes
Iordan Mateev, editor in chief, Forbes Bulgaria
Caleb Melby, wealth team reporter, Forbes
Iga Motylska, sub editor, Forbes Africa
Mfonobong Nsehe, The Africa Chronicles, Forbes.com
Jacek Pochlopien, deputy editor, Forbes Poland
Giorgios Retsinas, former senior editor, Forbes Middle East
Tatiana Seraﬁn, international wealth analyst
Petr Simunek, editor in chief, Forbes Czech
Paul Trustfull, editor in chief, Forbes Afrique
Viktor Vresnik, editor in chief, Forbes Croatia
APPENDIX
STATISTICAL INFORMATION ON ULTRA HIGH
NET WORTH INDIVIDUALS IN CENTRAL & EASTERN
EUROPE, AFRICA AND THE MIDDLE EAST
250 UHNWIs
NOTE: Some percentages may not add to 100% due to rounding.
■ AGE OF BUSINESS
FIRST GENERATION: 78%
SECOND GENERATION: 17%
THIRD GENERATION: 3%
(1% NA)
INHERITED AND GROWING: Individuals
who inherited their fortune and continued to increase their fortune. They could
be making money through their inherited
company or a different one.
■ GEOGRAPHICAL REACH
LOCAL: only operating in the home
country
REGIONAL: operating in neighboring
countries
INTERNATIONAL: global operations
INHERITED: 4%
INHERITED AND GROWING: 16%
SELF-MADE: 77%
(3% NA)
INTERNATIONAL: 0.5%
LOCAL: 15%
LOCAL, REGIONAL: 9%
LOCAL, INTERNATIONAL: 5%
LOCAL, REGIONAL, INTERNATIONAL: 71%
■ AVERAGE SIZE OF FORTUNE
$2,785 million
■ AVERAGE AGE 57
■ INDUSTRY (TOP FIVE)
DIVERSIFIED: 32
BANKING: 18
OIL: 13
INVESTMENTS: 13
REAL ESTATE: 11
■ GENDER
MALE: 98%
FEMALE: 2%
■ FAMILY INVOLVEMENT
NONE: 64%
SOME FAMILY INVOLVEMENT: 36%
■ SELF-MADE, INHERITED, OR
INHERITED AND GROWING
■ NOTABLE INVESTMENTS AND
PURSUITS
SELF-MADE: Individuals who made their
fortunes themselves.
INHERITED: Individuals who inherited
their fortune.
SPORTS: 39
PHILANTHROPY: 35
POLITICS: 27
ARTS: 23
REAL ESTATE: 14
154 UHNWIs
■ COUNTRIES
Czech Republic, Georgia, Kazakhstan,
Poland, Romania, Russia, Turkey, Ukraine
■ AGE OF BUSINESS
country
countries
LOCAL: 17%
LOCAL, REGIONAL: 5%
(2% NA)
■
AVERAGE AGE 54
■ GENDER
MALE: 99%
FEMALE: 1%
their fortune.
SELF-MADE: 97%
(2% NA)
■ AVERAGE
$3,058 million
SIZE OF FORTUNE
DIVERSIFIED: 16
INVESTMENTS: 8
BANKING: 8
OIL: 8
CONSTRUCTION: 4
NONE: 72%
NOTABLE INVESTMENTS AND
PURSUITS
■
SPORTS: 31
POLITICS: 21
ARTS: 14
PHILANTHROPY: 13
REAL ESTATE: 6
RUSSIA
70 UHNWIs
■ AGE OF BUSINESS
country
countries
LOCAL: 20%
LOCAL, REGIONAL: 6%
LOCAL, REGIONAL,
INTERNATIONAL: 71%
■ AVERAGE AGE 50
■
GENDER MALE: 100%
SELF-MADE: 100%
$4,600 million
STEEL: 5
OIL: 5
INVESTMENTS: 3
OIL, BANKING, TELECOM: 3
BANKING, IT, REAL ESTATE: 2
NONE: 81%
their fortune.
PURSUITS
SPORTS: 14
POLITICS: 11
ARTS: 11
REAL ESTATE: 6
AFRICA
50 UHNWIs
■ COUNTRIES
Angola, Egypt, Kenya, Morocco, Nigeria,
South Africa, Tanzania, Uganda,
Zimbabwe
■ AGE OF BUSINESS
country
countries
INTERNATIONAL: 2%
LOCAL: 20%
LOCAL, REGIONAL: 4%
their fortune.
SELF-MADE: 82%
INHERITED: 4%
$1,543 million
REAL ESTATE: 7
DIVERSIFIED: 6
BANKING: 6
OIL: 5
RETAIL: 4
■ AVERAGE AGE 61
NONE: 64%
■ GENDER
MALE: 96%
FEMALE: 4%
PHILANTHROPY: 12
SPORTS: 8
REAL ESTATE: 6
PURSUITS
MIDDLE EAST
46 UHNWIs
■ COUNTRIES
Israel, Kuwait, Lebanon, Saudi Arabia, UAE
■ AGE OF BUSINESS
(4% NA)
country
countries
INTERNATIONAL: 2%
LOCAL, REGIONAL: 26%
LOCAL, REGIONAL, INTERNATIONAL:
61%
(4% NA)
■ AVERAGE AGE 61
■ GENDER
MALE: 98%
FEMALE: 2%
their fortune.
SELF-MADE: 50%
INHERITED: 9%
(2% NA)
$3,249 million
■ INDUSTRY (TOP
DIVERSIFIED: 10
INVESTMENTS: 5
BANKING: 4
SOFTWARE: 4
REAL ESTATE: 4
FIVE)
NONE: 37%
■ NOTABLE INVESTMENTS
AND PURSUITS
PHILANTHROPY: 8
POLITICS: 6
ARTS: 5
YACHTS: 3
REAL ESTATE: 2
ABOUT FORBES INSIGHTS
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research practice of Forbes Media,
publisher of Forbes magazine
and Forbes.com. Taking advantage
of a proprietary database of
senior-level executives in the
Forbes community, Forbes Insights’
research covers a wide range of vital
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management; marketing; financial
benchmarking; risk and regulation;
small/midsize business; and more.
Bruce Rogers
CHIEF INSIGHTS OFFICER
Brenna Sniderman
SENIOR DIRECTOR
Christiaan Rizy
DIRECTOR
Kasia Moreno
EDITORIAL DIRECTOR
& REPORT AUTHOR
Lawrence Bowden
MANAGER, EMEA
Clara Knutson
RESEARCH MANAGER
Miriam Campiz
DESIGNER
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