Forbes India 05 April 2013 (e-magazine full)

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I N D I A

Tablet Edition Welcome to the

In Association With

On Doers and Doings

The special edition that you hold in

your hands is the definitive guide

to the richest people on earth

For a little less than three decades, Forbes

has been at the forefront of tracking the

wealth of the biggest billionaires around

the world The global wealth team, led by

editors Luisa Kroll and Kerry A Dolan,

have ranked the billionaires on the basis of

their net worth And this year too, despite

the global uncertainties, the 2013 Forbes

Billionaires list has as many as 1,426 names

True to form, the US has the highest

share of billionaires (442, to be precise),

but the rise of Asia is clearly noticeable In

all, there are 386 billionaires in the region,

up from 315 last year, which translates

into a 20 percent jump in net worth And

China is well ahead in that race, with 122

billionaires; India takes second place at

55 This time, the number of newcomers

(78) in Asia is significantly higher than the

number of dropouts (22), suggesting that

the momentum could last for a while

There are plenty of riveting stories in this

edition that are bound to keep you hooked

Like the one on Russian tycoon Mikhail

Prokhorov, who is a strong candidate to eventually replace Vladimir Putin in the Kremlin Don’t miss the incredible story

of Prince Alwaleed Bin Talal of Saudi Arabia He’s apparently willing to go to any lengths to push up his ranking on the

Forbes list, except that his methods are now

no longer a secret In 2010, I remember meeting Renzo Rosso in Mumbai, when he was here to launch his brand Diesel, in alliance with Reliance Brands

Today, Rosso is building a global fashion conglomerate that could rival LVMH

When this magazine was launched

in the US in 1917, its original name was

Forbes: Devoted to Doers and Doings The billionaire entrepreneurs, who feature in these pages, are a testimony to that very same spirit As Nolan Bushnell, the founder

of Atari, once said about entrepreneurship,

“The critical ingredient is getting off your butt and doing something It’s

as simple as that A lot of people have ideas, but there are few who decide to do something about them now Not tomorrow

Not next week But today The true entrepreneur is a doer, not a dreamer.”

315 lAsT yeAr, which TrAnslATes inTo A 20 percenT jump in neT worTh

Since its debut three years ago, 105

billionaires have signed Warren

Buffett and Bill Gates’ Giving

Pledge, promising to give away at

least half their wealth Here are 11

non-US billionaire signatories Plus:

Amancio Ortega leads our annual

scorecard of biggest gainers

Nearly all of the world’s 1,426

billionaires are married, but

these five have never tied the

knot Plus: Up-And-Comers, the

Billionaires edition

These entrepreneurs put their

countries on the billionaire map

for the first time

Only 68 billionaires failed to make

it to the list this year, and eight of those died That pales in comparison with the 210 newcomers Here are

10 notable drop-offs

We take a quick look at 10 of the 24 women on our list who started their own businesses

List tells us

An analysis of our list shows which emerging economies are on the rise and which will disappoint

There are 55 of them on the list, with

a total net worth of $194 billion

Contents

Nearly four decades after the communists declared victory,

it turns out capitalism won the Vietnam War The proof: Pham Nhat Vuong, the country’s first billionaire

PepsiCo bottler Ravi Jaipuria’s insatiable thirst for growth earned him a fortune

Prince Alwaleed says he’s one of the 10 richest people in the world

Forbes doesn’t buy it

Mikhail Prokhorov is a tycoon

in Russia, Jay-Z’s partner in Brooklyn—and a strong candidate

to eventually replace Vladimir Putin in the Kremlin, a prospect the billionaire is turning into his fulltime job

Renzo Rosso made his first billions

by bringing a sexy Italian touch

to the ultimate American icon, blue jeans Now he’s building an international fashion conglomerate that could one day rival LVMH

GoPro’s Nick Woodman lived to surf and take photos doing it A reminder of the most powerful

Most Eligible:

Jack Dorsey Woman On top: Rosalia Mera

model in business: Doing what

you love

The ranks of the world’s

billionaires, as monitored

and tallied by our global wealth

team, have yet again reached

alltime highs

Carlos Slim is once again the

world’s richest person, followed

Saudi Prince Alwaleed

Russian tycoon Mikhail Prokhorov

PepsiCo bottler Ravi Jaipuria

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Twenty-four hours of billionaire brands

124

The 2013 Forbes Billionaires

list now boasts 1,426 names,

with an aggregate net worth

of $5.4 trillion, up from

$4.6 trillion

features

Carbon beach

Life  Daily Sabbatical

Mumbai Vs bangaloreMumbai and bangalore’s roles in

a new global economyare small and Medium businesses really demanding Cheaper software?

The opportunity exists in growing markets across the world, and several software vendors are shifting focus on maximising their revenues from countries like brazil, India, russia and China; most of the individual businesses in these countries are small to medium in terms of revenues

ouR BloggeRs

Forbes billionaires list 2013

the soul oF the new Corporation

an ultrarunner, and founder & medical

director at back 2 Fitness

Chevrolet has the technology, portfolio of products which includes

a small car, quite a few sedans, a utility vehicle and a network that covers almost 170 cities in the country But

it continues to remain a fringe player in India

The Fizzy health Care Industryresearch shows that 20 percent taxes on fizzy drinks would add up

to over a billion pounds a year It is being recommended that the money

be used in treating obesitystereotyping: That blinding human Folly

some of us are blinded by our own personal stray experiences, comforting or otherwise, which makes us arrive at our own stereotypes The generic stereotypes, at least, are public and can be challenged

anIrudhaduTTa

blogs on stories beyond the numbers

ashIsh K

MIshra

an autophile with a handle on

the Indian auto industry

nIloFer d’souza

Writes on health, entrepreneurship and technology

Young IndIa: deVeloPIng, engagIng and reTaInIng gen Y TalenT

how the transition will need to be managed by the country as well as organisations in order to maximise the opportunities and benefits of this enviable demographic in India

Chevrolet India—The average Car Company

the possible ups and

downs of our future

work life

ChIna’s grosslY underesTIMaTed ConsuMPTIonChina’s consumption rate is generally comparable to the level of consumption

in the east asian tiger economies based on figures from PWT

Is ‘ConsCIous CaPITalIsM’

an anTIdoTe

To InCoMe InequalITY?

If capitalism creates unacceptable income inequality, what can

be done about it?

Contributing Editor: Mitu Jayashankar Consulting Editor: Sumana Mukherjee Editor (Markets And Finance):

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Editor (Telecom, Media And Entertainment): Rohin Dharmakumar Senior Assistant Editor:

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infor-I N D infor-I A

readers say

FLY HIGH BUT CHEAP

Refer to ‘Change is in the Air’ (March 22, 2013, issue).

I’m sure there would definitely be more articles linked to Air Asia, low-cost carriers (LCC) and India Discipline is much required in aviation and

it has a direct bearing on cost IndiGo was able to attract business customers primarily by being on time AirAsia has mostly self check-in kiosks and they work pretty well if a passenger is on time Most

of us do not need three people to issue a boarding pass Culturally, AirAsia fits well with the average India that wants to travel cheap, often, and not too far

Vaibhav Mathur

On the Web

AirAsia is all set to disrupt business models and the [aviation] sector in India

Perhaps it’s a dream come true for the original Indian LCC proponent:

Captain Gopinath Perhaps it’s a travesty of sorts for Kingfisher [Airlines] to look haplessly at such a phenomenon But employees of KF will be most exhilarated at the advent of AirAsia in India

22, 2013, issue). The cover

feature will, hopefully, open

a debate that will ultimately redefine CSR Spending for supporting social causes has, by and large, remained at the bottom end of priorities for the government and corporates

so far Without struggling

to put together a legal definition for CSR, those who are lucky to govern and manage resources that belong to society, should take upon themselves the responsibility to eradicate hunger and poverty, provide shelter and potable water, promote literacy and offer reasonably affordable health care

MG Warrier Via Email

CHARGE YOUR CAR

Refer to ‘Electric Vehicles:

Has It Really All Come Together?’ (March 22, 2013, issue). EVs appear to be

a great alternative on the face of it Underlying this are some facts that stare at

us First: The availability

of power Take Tamil Nadu for instance Barring Chennai, power is available for only 12 hours a day in the state Low voltage is another evil Second, the government must come out with zero tax/duty for

EVs Instead of subsidising diesel, it might as well subsidise the purchase

of an EV, because this is only a one-time subsidy and not a recurring one

CS Ananth Via Email

STEEL SOLUTIONS

Refer to ‘Waiting for Payback’ (March 22, 2013, issue). Another smart way

to reduce the capex cost

is to acquire a running plant from Europe or the

US With the economic slowdown there, it could

be had at a very reasonable price Around the world, there are many stressed assets like these, which Indian companies must go after in order to become globally competitive

in India Just imagine yourself in 2005 and see the difference in 2013

on record profits at the

trendy retail chain.

eike BAtistA

–$19.4 billion

Net worth:

$10.6 billion

Brazilian who bragged

he’d one day be world’s

richest man falls from

No 7 to No 100, amid

plunging mining stocks,

losing the equivalent

of $53 million a day.

WArren Buffett

+$9.5 billion Net worth:

$53.5 billion

Berkshire Hathaway’s surging shares pumped

up the 82-year-old CEO’s fortune, but he drops a spot in our wealth rank- ing because of outsize charitable giving.

ricArdo sAlinAs

–$7.5 billion Net worth:

$9.9 billion

Last year, Salinas made more money than anyone as shares

of his Grupo Elektra skyrocketed; the shares have since fallen 50%.

chArles koch

+$9 billion Net worth:

$34 billion

World’s richest siblings, David and Charles Koch, are up $9 billion apiece, thanks to rising refining and chemical profits, and solid results from Georgia-Pacific.

Azim Premji

–$4.7 billion Net worth:

Febru-/ leaderboard Febru-/

5,887

Ortega’s fashion retailer Inditex, including

1,938 stores in his homeland of Spain.

Since its debut three years ago,

105 billionaires have signed Warren Buffett and Bill Gates’ Giving Pledge, promising to give away at least half their wealth Here are 11 non-US billionaire signatories

Figures reflect the change in net worth from Feb 14, 2012 to Feb 14, 2013

Sources: Interactive data via Factset Research Systems; Forbes.

1  XAVier niel Age: 45 $6.6 billion iLiaD

2  eduArdo sAVerin Age: 30 $2.2 billion FaCeBooK

3  nicolAs Berggruen Age: 51 $2 billion

BerGGrueN hoLDiNGS

4  AlBert Von thurn und tAXis Age: 29 $1.5 billion iNheritaNCe

5  jAck dorsey Age: 36 $1.1 billion

tWitter, Square

nearly all of the world’s 1,426 billionaires are married—many

of them multiple times—but these 5 have never tied the knot

Dustin Moskovitz is the youngest

at 28, beating fellow Facebook co-founder Mark Zuckerberg

by about a week

lynsi torres | uS | Age: 30 | Net worth: $500 million

Torres’ path to billionaire status is simple: Wait five years The heiress to In-N-Out Burger is the beneficiary

of two trusts that collectively own 75% of the chain The trusts, made public thanks to legal tussles between Torres and two trustees, show that she received a third of the In-N-Out fortune when she was 25 and got nudged up to 50% when she turned 30 At 35, she’ll control the trusts fully She also has an outright claim

to 25% of the company Torres has a passion for drag racing; her third husband is driver Val Torres Jr

jAcques-Antoine grAnjon | FRanCE | Age: 50 | Net worth: $600 million

Before Gilt Groupe, there was Vente-Privee.com, the original flash-sales site founded in 2001 by Granjon, whose taste for glittering accessories has earned him the nickname “Louis XIV” in Paris’ social circles

Born to affleunt parents, Granjon failed his entrance exam to the prestigious Sciences Polytechniques, so

he started his career by buying unsellable stock in Sentier, Paris’ garment district, and reselling the items

to discount outlets His big idea: Cut out the middleman Now Vente-Privee’s annual sales top $1.5 billion

cyril rAmAPhosA | South aFRiCa | Age: 60 | Net worth: $700 million

Ramaphosa, a former anti-apartheid activist, took a breather from party politics in the late 1990s to pursue a business career Now he’s the chairman of Africa’s largest mobile phone company, MTN Group; owns the McDonald’s South Africa franchise; and serves as executive chairman of Shanduka Group He also has a partnership with Coca-Cola In December, the African National Congress party overwhelmingly voted to make Ramaphosa its deputy leader—and, in turn, South Africa’s vice president

Virgin Territory

Welcome to the Club

These entrepreneurs put their countries on the billionaire map for the first time

This year 210 people joined the Forbes billionaires ranks Doughnuts and yogurt

fuelled two of them

Swaziland

nathan Kirsh

$3.1 billion

Started with a corn milling

business in 1958; now supplies

groceries and goods to New York

City restaurants and bodegas

Bought London’s second-tallest

building for $455 million.

Fernando Belmont

$2.2 billion PERU

COSMETICS

The Peruvian entrepreneur

owns Yanbal International,

a fast-growing door-to-door

cosmetics company with

esti-mated sales of $720 million

He has expanded the firm

beyond Peru, to Spain and eight

Latin American countries.

$600 million in 1995 His tune grew with investments in dividend-paying Canadian firms.

in mobile phone network Unitel, plus banking assets in Portugal.

in 2001 to make a big play in local condos and luxury resorts through his Vingroup.

nepal

Binod chaUdhary

$1 billion

The fitness fanatic who hikes

in the Himalayas controls an international fortune that stretches from Nepal’s Nabil Bank to a joint venture with India’s Taj hotel chain.

The Fallen

Only 68 billionaires fell from the list this year, and eight of those died That pales

in comparison with the 210 newcomers to the list Here are 10 notable drop-offs

Vijay mallya InDIa

Mallya’s Kingfisher Airlines is on the verge

of closure Planes grounded, salaries unpaid

for months The wife of a Kingfisher engineer

committed suicide due to financial worries

Mallya is trying to sell his stake in United

Spirits to Diageo to pay off Kingfisher’s

debts—estimated at over $2 billion.

alexander lebedeV RussIa

Lebedev has always clashed with his

country’s power structure, and he owns the

country’s leading opposition newspaper The

former National Reserve Bank in Moscow

and his Crimean hotel were both searched

in 2011 Lebedev now owns National Reserve

Corp (NRC) In 2012, Russian authorties

forced Lebedev to sell all his assets in

government-majority-owned Aeroflot He got

in a laugh when he appointed his

15-month-old son to the board of Aeroflot “The boards

of state-owned companies basically have no

decision-making power,” he said “Why do

they need adults?”

mark pincuS us

After stock in Zynga, the online-game maker

Pincus founded, hit highs in April 2012 of $15

a share, everything went downhill In March,

the company bought OMGPOP, maker of

Draw Something, for $200 million Then the

daily user base for the game plummeted On

May 18, came the Facebook IPO And when

Facebook floundered, Zynga followed From

March through August, the stock lost 80

percent of its value.

aubrey mcclendon us

He is the soon-to-be-former CEO of Chesapeake Energy, America’s second- largest natural gas producer and its most active driller and fracker Chesapeake has always aggressively employed debt leverage

In late 2011, we dubbed him ‘America’s most reckless billionaire’ He was forced to sell nearly all his Chesapeake shares in a 2008 margin call His love of leverage has sent him off the list.

william randolph

hearSt iii usGlimpses of the Hearst family fortune, first created by media baron William Randolph Hearst, were revealed during legal proceedings surrounding Phoebe Hearst Cooke’s conservatorship Cooke died in 2012, just months after her twin brother, George Randolph Hearst Jr, died

What was found in those legal proceedings?

Payments from the Hearst Trust are much lower than previously thought.

joaquin guzman loera MexIcOOne of the world’s most wanted drug dealers and leader of the Sinaloa cartel,

‘El Chapo’ is believed to be living in Mexico

He is no longer someone we are confident

to call a billionaire.

john Sperling usFormer professor founded Apollo Group, which runs for-profit schools, the biggest being University of Phoenix Both he and his son Peter have sold most of their shares

in the failing enterprise over the years, giving their fortune some protection from the company’s decline.

thomaS Straumann

swITzeRlanDStraumann Holdings, Straumann’s dentistry products and services company, is down 70 percent since its 2007 highs He’s had to sell some personal assets, including his Aston Martin DB5, to make ends meet.

dinu patriciu ROManIa

He had a liver transplant in December His fortunes also suffered, with both his retail chains declaring bankruptcy in February

He also unloaded his media assets.

eric Sprott canaDaCanadian precious metals fanatic’s Sprott Inc has trusts that appear on the NYSE and TSX Volatile gold prices have sent Sprott Inc’s shares down 45 percent year-on-year, knocking Sprott off the list.

In MeMORIaM

0 

chaleo yooVidhya THaIlanD RED BULL

With almost no formal education, Yoovidhya founded

a pharma business in the 1960s before concocting an energy drink full of caffeine and taurine, which was marketed

to the world as Red Bull by his Austrian business partner, Dietrich Mateschitz Cramming students, rushed truck drivers and hangover sufferers will be forever grateful.

otto Beisheim GeRManYchen din hwa HOnG KOnGroBerto gonzalez Barrera MexIcO

walter haeFner swITzeRlanDgeorge hearst us

minorU mori JaPanalBert Ueltschi us

Self-Made Women

It was a record-setting year for women on the Forbes Billionaires list, with 138 in the ranks,

up from 104 last year Plus there were also more who started their own businesses, 24 It is a reason for celebration but also for consternation: Only 1.7 percent of all billionaires—and only

17 percent of the female listees—are self-made women Here are the top 10

Wu Yajun$4.3 billion

CHInareaL eState

A former journalist, Wu started property

developer Longfor in 1994 She and her team

turned it into a national brand, and it’s now

headquartered in Beijing She was previously

China’s richest woman, but her divorce last

year knocked her from the top spot.

Chan LaiWa$4.1 billion

CHInareaL eState

Chan was born poor but is now one of the

rare self-made female billionaires in the world

Her Fu Wah International Group is one of

Beijing’s largest real estate developers, having

developed nearly 1.5 million square metres

of property since its inception in 1988.

Diane henDriCks$3.8 billion

usrooFInG

She started ABC Supply, now the nation’s largest roofing, window and siding wholesale distributor, with her husband, Kenneth, and took over when he died in 2007 In addition

to ABC, Hendricks presides over 25 million square feet of commercial property and 25 smaller companies via Hendricks Holdings.

Zhang Xin$3.6 billion

CHInareaL eState

Zhang and her husband, Pan Shiyi, founded Soho China in Beijing in 1995 and have continued to aggressively buy up real estate

in Beijing and Shanghai, transforming the cities’ skylines Soho China is now Beijing’s

largest property developer Prior to founding

it, Zhang worked on Wall Street for Goldman Sachs and Travelers Group.

Doris Fisher$2.8 billion

usGap

She started the Gap with her late husband, Donald, in 1969 as a San Francisco jeans and music store These days she’s known as a prolific art collector and philanthropist, who has donated $120 million to the KIPP charter school network and Teach For America.

oprah WinFreY$2.8 billion

usMeDIa

The majority of Oprah’s net worth stems from 25 years of her profitable daytime-TV show, plus earnings from her Harpo pro- duction company, which has a hand in the

Dr Phil, Rachael Ray and Dr Oz shows.

Marion iLitCh$2.7 billion

us pIZZa

With her husband, Michael, Ilitch built a gle pizza shop into the Little Caesar’s Pizza chain, which had over $3 billion in revenues last year (Shares fortune with husband.)

sin-LYnDa resniCk$2.2 billion

usDIverSIFIeD

Since the 1970s, master marketers Lynda and Stewart Resnick have built or bought companies, including POM Wonderful, Fiji Water and flower-delivery service Teleflora They also own pistachio, almond and citrus farms, plus a winery (Shares fortune with husband.)

giuLiana Benetton$2 billion

ItaLyFaSHIon

Benetton formed clothing retailer Benetton Group with her siblings in 1965 Giuliana originally knitted sweaters that her brother Luciano would peddle by bicycle; they were sold under a variety of labels before be-coming United Colors of Benetton.

rosaLia Mera $6.1 billionsPaInZara

Mera is now the wealthiest self-made woman on the planet, thanks in part to a 50 percent

jump this past year in the value of Inditex, the fashion retailer she co-founded with her

ex-husband Amancio Ortega, the world’s third-richest man She dropped out of school at age

11 to work as a seamstress, then helped Ortega make dressing gowns and lingerie in their

home The couple has long been divorced, but she still has a stake in the company, best

known for its Zara brand Her Paideia Foundation works to integrate people with physical

and mental disabilities, like her son Marcos, into larger society.

What the Billionaires

List Tells Us

Examining the rankings offers clues to which emerging economies are on the

rise and which will disappoint One key: Good fortunes versus bad fortunes

/ mining the data /

By RUChiR ShaRma

Everyone enjoys the

voyeuristic thrill of Forbes’

annual listing of the

world’s billionaires, but

as an emerging market investor I use

the list as a tool to spot what I call

Breakout Nations—economies poised

to beat expectations, and rivals, over

the next five to 10 years Analysing

the list can provide a quick read on an

emerging economy If the billionaire

class controls fortunes that are

outsize, compared with the size of the

economy and its level of development,

it’s a sign that an economy is out of

balance And if the same few names

appear on the list year after year, with

no new blood, it’s a sign of stagnation

The emergence of billionaires is

a good sign—if they are emerging in

productive fields such as technology

or manufacturing In the 2000s,

however, the world saw the rise

of many billionaires who rely on

government connections to build

monopolies in sectors such as oil, real

estate and mining—industries that

traditionally contribute much less to

sustainable growth because they are

volatile and often prone to corruption

This type of billionaire is a bad sign

Applying this analysis to the

2013 list yields some surprising

results For all the buzz about

corruption and inequality in China,

its billionaires control wealth

equal to just 3.2 percent of its gross domestic product (GDP)—making this the least-bloated billionaire class among the big emerging markets

The average fortune of the top 10 Chinese billionaires is now $6.8 billion, still modest in an economy that was the single largest contributor

to global GDP growth over the past decade China also shows a healthy

turnover among those top 10, with nine newcomers on the 2013 list compared with 2007 The country’s richest person, Wahaha Chairman Zong Qinghou, shot to the top this year, thanks to his fast-growing beverage business Yet, his net worth

of $11.6 billion is still smaller than the fortunes of leading tycoons in much smaller economies, including Malaysia and the Philippines

These results may not be entirely coincidental—several men previously

on the billionaires’ list have landed

in jail This suggests that the state may be stepping in to quash excessive and misbegotten fortunes, a policy akin to killing a few chickens to scare the monkeys But they do imply that Beijing is working more effectively

to foster competition and contain wealth—at least that of the ultrarich— than recent headlines indicate The general rule is that if the total net worth of the billionaire class surpasses 10 percent of GDP—the rough average for emerging markets—there could be a popular backlash The Philippines, Malaysia, Taiwan and Thailand are now all above the 10 percent threshold, and India is on the edge, with billionaire wealth equal to 9.9 percent of GDP.India is the most surprising billionaire story in Asia because in the global imagination it’s still closely

High turnover among a country’s richest signals a dynamic, competitive economy

YOu’rE up, YOu’rE DOwn

33%

% OF TOP TEN BILLIONAIRES IN 2007 GONE FROM THE TOP TEN NOW

associated with the Mumbai

tech tycoons and the rising

middle class of IT workers

In the past decade,

however, more and more

of its largest fortunes

were built by businessmen

who cut political deals to

corner provincial markets

India’s incomplete reform

agenda has left it near the

bottom, at No 166, of the

World Bank’s rankings

of 183 countries for ease

of starting a business

These obstacles to doing

business are chasing big

companies overseas and

preventing small outfits

from challenging

well-connected tycoons

In November, liquor

tycoon Ponty Chadha,

described by the press as a

man who had prospered on

“fistfuls of state favours”,

was shot to death in a

dispute over the ownership

of a farmhouse outside

New Delhi, an event that seemed to

symbolise the rise and risks of the

newly connected billionaire class

Breaking down the 2013 list by

industry yields a striking snapshot

Russia is off the charts with 75

percent of its billionaire wealth

derived from classically unproductive

industries such as real estate and

natural resources, but India is second

worst at 41 percent This is also the

one metric on which China ranks

very poorly, with 32 percent of its

billionaire wealth coming from

unproductive industries, due in part

to its raging real estate bubble

What matters most is the direction

of change for the combination

of billionaire bloat, turnover and

productivity, and this year’s list does

carry some hopeful signs for India The

billionaires’ share of GDP has fallen

by roughly two percentage points since 2011, and the average net worth

of the top 10 tycoons has dropped by

$2 billion to around $10 billion This

is a result mainly of recent declines

in the stock market, but at least the billionaire imbalance is not growing

Also on the upside, the country’s top 10 includes two tycoons who weren’t there in 2010, with at least one from a dynamic and productive industry: Pharmaceuticals magnate Dilip Shanghvi

This year’s list suggests bright prospects for several of Asia’s emerging economies In South Korea and Indonesia, billionaire wealth is low as a share of GDP

These countries also tend to have

a healthy turnover among the elite,

with billionaires rising in the right industries Only one Indonesian billionaire was also on the list in

2007 In the Philippines, while the billionaire share

of GDP doubled to 17 percent between 2012 and

2013, some 86 percent of that wealth came from productive industries

The global rise of “bad” billionaires since 2000 has been epitomised by the reversal in fortunes of tech tycoons and energy barons

As growing demand from China pushed up commodity prices, particularly for oil, the energy barons rose to the top

In 2001, the world had 29 billionaires in energy (mostly oil) and 75 in technology

In 2011, that ratio was reversed: 91 in energy and

36 in technology This year, those numbers have shifted again as China slows

There are now 93 energy billionaires and 95 in technology

And more billionaires have been rising in the energy sector on the strength of technology, particularly the new methods to tap oil and gas trapped inside shale rock So energy

is increasingly a technology story

The billionaire analysis is going

to get much more interesting

Only a decade ago, China had no billionaires; now it has 122, so the billionaire data is becoming more significant over time It’s worth watching closely, particularly for new faces and for good billionaires emerging in productive industries ruchir Sharma, author of Breakout nations (norton, 2012), is head of emerging markets and global macro at Morgan Stanley

Investment Management

Creating billionaires mainly in productive industries such

as technology and manufacturing is a sign of healthy growth for an economy Cyclical, often unproductive sectors such as mining, real estate or oil tend to be dominated by government-favour-seeking, leading to more corruption and less growth

wElcOME, GOOD BIllIOnaIrES

/ indiascape /

The Pecking Order

Who gains and who loses: Mapping India Inc’s score sheet

Mukesh AMbAni LAkshMi MittAL PreMji AziM shAnghvi DiLiP rAvi ruiA shAshi &

Mukesh Ambani and Lakshmi Mittal’s fortunes have peaked and troughed since 2009, remaining about even

Azim Premji, Dilip shanghvi and shashi & ravi ruia however, have seen stellar growth of 30-40% in the last five years

Azim Premji saw the single biggest jump in the top 5 in 2009/10, almost tripling his wealth however, he’s had 30% wiped off since last year

Dilip shanghvi is the year’s big gainer, increasing his wealth by $2 billion or 27%

6 3

5 3

4 20

3 55

6 0

4 3

2 3

Retail Soft

drinks YusuFF

ALi MA jAiPuriArAvi MurALi Divi & FAMiLY rAnjAn PAi MoFAtrAj Munot kALYAnibAbA jitenDrA virWAni ALukkAsjoY nirAv MoDi kALYAnArAMAnts

Wealth ($ bln) sector global rank

no of billionaires in 2013 no of billionaires in 2012 rank

the total wealth of india’s 55 million billionaires stands at $193.6 billion the average net worth of india’s billionaires has fallen by more than $0.5 bn since 2012 7 more indian billionaires in 2013 than 2012; their total wealth roughly the same

1.00

Telecom

bhuPenDrA kuMAr MoDi  

/ indiascape/

gAiners sinCe 2012benu goPAL

bAngur

MAngAL PrAbhAt LoDhA

Percentage Wealth gain

ADi goDrej

& FAMiLY

AshWin DAni

jAMshYD goDrej &

FAMiLY

73

Losers sinCe 2012gAutAM

ADAni

sAvitri jinDAL

& FAMiLY PreMjiAziM

AniL AMbAni

gM rAo

Percentage Wealth Loss

-43 -30 -30

-33 -42

40 50

36 50

gLobAL nAMe WeALth Age seCtor WeALth

22 Mukesh Ambani 21.50 55 Petrochemicals,

oil & gas

41 Lakshmi Mittal 16.50 62 steel

91 Azim Premji 11.20 67 software

116 Dilip shanghvi 9.40 57 Pharmaceuticals

131 shashi & ravi ruia 8.50 - Diversified

150 kumar birla 7.90 45 Commodities

155 savitri jindal & family 7.60 62 steel

173 sunil Mittal & family 6.80 55 telecom

182 shiv nadar 6.50 67 information technology

191 kushal Pal singh 6.30 81 real estate

233 Anil Ambani 5.20 53 Diversified

286 uday kotak 4.40 53 banking

329 Micky jagtiani 4.00 61 retail

346 Cyrus Poonawalla 3.90 71 biotech

376 Adi godrej & family 3.60 70 Consumer goods

376 jamshyd godrej & family 3.60 64 Consumer goods

395 Anil Agarwal 3.40 59 Mining, Metals

412 kalanithi Maran 3.30 47 Media

437 gautam Adani 3.10 50 Commodities,

infrastructure

554 Malvinder & shivinder singh 2.60 40 health Care

613 subhash Chandra 2.40 62 Media

613 Desh bandhu gupta 2.40 75 Pharmaceuticals

670 indu jain 2.20 76 Media

670 brijmohan Lall Munjal 2.20 89 Motorcycles

704 Ajay kalsi 2.10 - oil

704 Pankaj Patel 2.10 59 Pharmaceuticals

736 rahul bajaj 2.00 74 Motorcycles

736 rajan raheja & family 2.00 58 Diversified

792 benu gopal bangur 1.90 81 Cement

831 Chandru raheja 1.80 72 real estate

831 rishad naoroji 1.80 61 Consumer goods

931 Ajay Piramal 1.60 57 Pharmaceuticals

965 habil khorakiwala 1.55 70 Pharmaceuticals

965 nr narayana Murthy & family 1.55 66 software

974 k Anji reddy & family 1.50 71 Pharmaceuticals

974 Yusuff Ali MA 1.50 57 retail

974 Ashwin Dani 1.50 70 Paints

974 brij bhushan singal 1.50 76 steel

1024 vikas oberoi 1.45 42 real estate

1031 ravi jaipuria 1.40 58 soft Drinks

1031 Mangal Prabhat Lodha 1.40 57 real estate

1088 s gopalakrishnan & family 1.35 57 software

1107 Murali Divi & family 1.30 61 Pharmaceuticals

1107 ranjan Pai 1.30 40 education

1107 nandan nilekani & family 1.30 57 software

1161 rakesh jhunjhunwala 1.25 52 investments

1161 venugopal Dhoot 1.25 61 electronics

1175 Mofatraj Munot 1.20 68 real estate

1175 baba kalyani 1.20 64 engineering

1175 Yusuf hamied 1.20 76 Pharmceuticals

1268 gM rao 1.10 62 infrastructure

1342 jitendra virwani 1.00 47 real estate

1342 joy Alukkas 1.00 56 jewellery

1342 nirav Modi 1.00 42 Diamond jewellery

the toP inDustries

the top five indian billionaires are

in these sectors: Petrochemicals, oil & gas; steel; software; pharma, diversified the richest Chinese billionaire is in the beverage industry real estate accounts for six indian billionaires, while 22 of the Chinese billionaires come from this sector.

the Vietnam War The proof: Pham Nhat

Vuong, the country’s first billionaire

By laN aNh NguYeN;

Photograph By JustiN mott / redux for forBes

on a brilliant morning last October, Dong Khoi

Street, the premier commercial thoroughfare in Saigon, was closed for nearly two hours to celebrate the opening of Vincom Center A, a precisely, if infelicitously, named shopping centre The development

was remarkable, not just for its scale (410,000 square feet

of commercial space; three floors of underground parking;

a 300-room, five-star hotel) or for its high-end tenants

(Versace, Hermès, Dior) but simply because it was opening at all Vietnam’s real estate market had been frozen hard since

crashing in 2011, with at least 13.5

percent of the country’s $10 billion

in real estate loans having gone bad

But Pham Nhat Vuong, the man

most responsible for this $500

million commercial triumph in the

heart of what is still officially called

Ho Chi Minh City, wasn’t drinking

any champagne, cutting any ribbons

or giving any speeches Rather,

the 44-year-old quietly watched

the ceremony from a front-row

seat “I prefer sipping happiness

by myself,” Pham explains later, in

a rare interview from his elegant

new offices in Hanoi’s Vincom

Village, another of his projects

Pham’s given name translates as

“prosperity”, and he is often described

as the Vietnamese Donald Trump

He’s now also the first billionaire

in the history of Vietnam—Forbes

estimates that he’s worth $1.5 billion

based largely on the 53 percent

stake he owns (both indirectly

and directly) in Vingroup, his real

estate development firm and the

fifth most valuable company on

the Vietnamese stock exchange

Still, Vietnam remains saddled

with hundreds of inefficient

state-run enterprises, rampant corruption

and bouts of runaway inflation The

8 percent-a-year growth of a decade

ago is a distant memory, and an

austerity policy is in full effect Yet

Pham’s story personifies the

post-Vietnam War story of this nation, a

capitalistic achievement in a country

that remains, nominally, communist

Pham was born in Hanoi in

1968, the same year as the Tet

Offensive, the most momentous

year in the war that still shapes

Vietnam today His father served in

the North Vietnamese air defense

force; his mother ran a sidewalk tea

stand While the North won the war

and united the country, they lost the

/ asia-pacific /

economic battle; the national finances were in ruins, and the country’s leaders were married to rigid five-year plans, with few allies outside of Soviet Russia Pham’s family at one point survived solely on his mother’s meager earnings “My dream at the time wasn’t big,” says Pham “I just wanted to support my family.”

Pham escaped his circumstances through books He proved himself something of a math prodigy, earning

a scholarship to study the economics

of raw material extraction at the Moscow Geological Prospecting Institute Just as the timing of his birth was fateful, so was his 1993 graduation The collapse of the Soviet Union had given way to a swirl of chaos, crime—and opportunity

Back home, Vietnam had begun

experimenting with Doi Moi, or

market-based reforms within the ongoing socialist structure

After marrying his college sweetheart, Pham decided to remain abroad to try to take advantage of post-Soviet opportunities The young couple made their way to another nation struggling in its capitalistic infancy, Ukraine After scraping

together $10,000 from family and friends, Pham opened a Vietnamese restaurant in Ukraine He also began making and drying ramen noodles using a production line he imported from Vietnam The concept

of instant noodles was completely new to Ukrainians—and an instant hit Recalls Pham, “Ukrainians were very poor—and very hungry.”

So Pham took a risk: Rather than run a small noodle shop, he bet everything by borrowing money at

a criminally high interest rate—8 percent a month—and expanding his production to the dehydrated mixes that Vietnamese chefs traditionally use to season noodle soup He primed the virgin market

by producing a half-million small packages and giving them away with Vietnamese-themed calendars.The locals quickly became hooked

on flavoured instant noodles, and Pham became Ukraine’s processed-food king By 2010, when he sold the company for an estimated

$150 million to Nestlé, Pham’s noodle company, Technocom, had revenues of $100 million

This highly unconventional

post-Vincom center A: Bourgeois consumerism on total revolution (Dong Khoi) Street

Soviet success story was about to get a

twist For years Pham had been slowly

funneling the money from his Ukraine

noodle empire back into projects in his

homeland, in an attempt to create an

even bigger post-communist fortune

Pham’s Vietnam foray had started

innocently enough At the turn

of the millennium he took a

trip to the beach city of Nha Trang

The economy was booming: Vietnam

had dodged the 1997 Asian Financial

Crisis, normalised trade relations

with the US and reaffirmed the

economic role of the private sector

Between 2000 and 2006 Vietnam’s

GDP would grow—albeit from a small

base—at least 6 percent each year

Feeling the lift, Pham figured

he’d engage in a small local project

Why not turn the undeveloped

island just off the coast and develop

it into a luxury resort? The result was the 225-room, ultraluxe Vinpearl Resort Nha Trang

Again Pham found quick success

The next year he introduced Vincom Center Ba Trieu, the first commercial tower complex in Hanoi

Three years later he added 260 more rooms to Vinpearl, along with

a 2-mile cable car connecting the island to the mainland He followed with several high-end townships in Hanoi, including Vincom Village, a luxury development with hundreds

of villas Vincom, comprising his commercial and residential real estate interests, went public in 2007, while he maintained Vinpearl as a separate company for his luxury resort business Last year Pham merged the two companies to create Vingroup

As his wealth grew, so did Pham’s reputation While he has acquired a few of the trappings of

a billionaire—a beautiful mansion nestled between man-made hills

in Vincom Village, a Bentley, his own charitable foundation—by all accounts he lives modestly, watching martial arts movies rather than tooling around in his luxury car and sticking with vacations at his own resort in Nha Trang Yet, as someone who had made money in eastern Europe, stories have also abounded about shady connections and crooked money Pham, who remains youthful and energetic, simply shrugs

“According to the rumours, I’ve died

at least four times in the last year,”

he says “First story: Moscow killers flew in and shot me to death Second story: I visited Moscow and was shot

to death by Russian mafia Third story: I was shot in Ukraine Last year I didn’t even visit Ukraine or Russia! The most recent story: I have died because of cancer I am doing this well, and they said I got cancer!

“So as a saying goes, ‘The dogs bark, but the caravan goes on.’ I just need to focus on what I do.”

Pham’s caravan is marching

way ahead of the barking, churning out new office towers, townships, resorts, condos and shopping centres at a dizzying pace Vingroup now has a portfolio

of 31 real estate developments: 12 have been completed, three are under construction and the rest are

in some stage of preconstruction planning (several projects are on hold, so as not to drive down the prices of other inventory, given the soft market) “Vingroup is in a class

of its own,” says Marc Townsend, managing director of CBRE Vietnam, the local outpost of the multinational commercial real estate services

Postwar Vietnam has been hampered by rigid five-year plans, the collapse of the

Soviet Union and sky-high inflation Still, its economy remains one of the fastest

growing in the world

VINGROUP SHARE PRICE

POSTWAR GDP GROWTH RATE NOMINAL GDP PER CAPITA

SOURCES: INTERACTIVE DATA VIA FACTSET RESEARCH SYSTEMS; BLOOMBERG

SOURCES: INTERNATIONAL MONETARY FUND, WORLD ECONOMIC OUTLOOK DATABASE

firm “They are building the biggest

projects in the country They have

been consistently looking for new

ideas and talent in a very difficult

situation Most people would stop in

this market, but Vingroup hasn’t.”

Pham’s secret has been focusing

on people like himself: Members of

the new generation who are intent

on living better than their parents

It’s a big market—60 percent of

Vietnam’s 92 million citizens are

under 40 years old—that he caters

to with tightly integrated projects

in prime locations He doesn’t just

build condos, villas and apartment

blocks; he also builds the hospitals,

office buildings and shopping malls

that support them And just as

important, while even other real

estate developers back in the game

face massive delays, Pham completes

his projects on time Saigon’s Vincom

Center A went up in just 19 months

In 2012, as most other developers were stuck with bad debts and no new sales prospects, Vingroup was able to book $1.7 billion in sales and presales That performance allowed Pham to raise $300 million in the international bond market, though Credit Suisse, the lead underwriter, was initially sceptical of Vingroup’s numbers “They hired lawyers and auditors to check,” remembers Le Thi Thu Thuy, a former investment banker at Lehman Brothers whom Pham brought on as Vingroup’s CEO shortly after that bank’s collapse “We let them see our bank statements and contact our clients.”

The foreign financing proved a godsend While Pham has emerged

as the richest man in Vietnam, he’s had a brutal time raising money domestically Locals shun the stock

Some Vietnamese brokerages like Saigon Securities don’t even assign analysts to cover it “We simply don’t like a company that has to constantly raise funds and incurs debt in two

or three consecutive years,” says Pham Truong Son, an investment director at Saigon Securities

And because of the strangeness

of the Vietnamese stock market, the price of Vingroup’s shares—and ultimately Pham’s net worth—doesn’t necessarily correlate with the health

of the company, which carries $1 billion in debt Nearly 50 percent

of Vietnam’s public companies are lumbering and grossly inefficient concerns formerly run by the state Vingroup is one of the few listed companies without a communist heritage Thus, two key foreign Vietnam-centric funds, Deutsche Bank’s MSCI Vietnam IMI and the Van Eck Market Vectors ETF, load

up on it, to the tune of 16 percent and 7 percent of their indexes, respectively These outside forces are as responsible as anything for driving Pham’s new billionaire status.Pham is now in the process of raising money from several “strategic investors”, with the ultimate goal of listing his firm on Singapore’s stock exchange, which would legitimate its stock price—and represent another milestone: The first Vietnamese company to be listed overseas.Ultimately, Pham understands that achievements like this will serve

as his legacy in the increasingly capitalistic country where his mom supported him making tea

He dreams of transforming the streetscapes of Hanoi and Saigon into something resembling Hong Kong or Singapore “If I could do that, even

if it cost me a few billion, I would

be happy,” he says “I would leave something behind—you can’t bring money with you when you die.”

the number of regional billionaires has increased 23 percent over the past 12 months

TOTAL NET WORTH $1.16 TRILLION DOLLAR CHANGE FROM 2012 $194 BILLION PERCENT CHANGE FROM 2012 20%

AVERAGE NET WORTH $3 BILLION

Countries With the Most Billionaires Top Ten Industries

TOTAL NUMBER OF BILLIONAIRES,

asia-pacific gold rush

/ asia-pacific /

Ilike to be near water,” says Ravi

Jaipuria, seated in his office on

the top floor of a building that

bears his initials and is situated

in Gurgaon, a bustling township

adjacent to Delhi The ocean is

nowhere close so the chairman of the

privately held RJ Corp—revenues

in excess of $1 billion—has to make

do with an artificial waterfall in

the terrace adjoining his office

Water of the flavoured kind has

made Jaipuria, 58, a fortune: PepsiCo’s

largest franchise bottler in India He

claims to be among the multinational

giant’s top three globally—is among

India’s new crop of billionaires, with

a fortune estimated at $1.4 billion

Jaipuria gets a chunk of that

wealth from bottling unit Varun

Beverages, which accounts for over

half of RJ Corp’s revenues Named

after his son, who works with him,

Varun Beverages has 10 bottling

plants in India plus an international

footprint that includes Sri Lanka,

Nepal, Morocco, Mozambique and

Zambia It claims to have close to a

third of Pepsi’s business in India A

PepsiCo India spokesman says that

half of its beverage volume is from

seven franchise bottlers, of which

Varun Beverages is the biggest

To fund what some say is an

unquenchable thirst for growth,

Jaipuria sought out private equity

for the first time in 2011 Standard

Chartered Bank’s private equity

arm invested $78 million in two

tranches for about 8 percent in Varun,

valuing the bottling unit at close to

$1 billion Jaipuria is planning to take the company public “either later this year or in 2014”, he discloses

Meantime, he’s further cementing his position as India’s bottling king

In February he sealed a deal for an estimated $65 million to acquire his older brother Chandra Kant Jaipuria’s bottling business in the National Capital Region, the biggest metro market for soft drinks in the country “Delhi is as big as Mumbai, Chennai and Kolkata put together,”

says Jaipuria, sounding elated over his latest coup “In the north, people will drink a whole bottle Elsewhere, people tend to share and we have

to compete with coconut water,”

he adds by way of explanation

Another fast-growing part of Jaipuria’s empire is fast foods, which

is benefiting from an eating out culture that’s caught on with urban Indians

RJ Corp’s Devyani International (named after Jaipuria’s daughter) has the franchise for Pizza Hut and KFC, both part of Yum Brands, as well as that for the UK’s Whitbread Group’s coffee chain Costa Coffee

Devyani also includes a South Indian fast food chain Vaango, which means ‘Please come’ in Tamil, and ice cream chain Swensen’s With

340 outlets in all, this business is growing in double digits, says RJ Corp’s fast foods head, Virag Joshi

In this business, too, Jaipuria has sought private equity: ICICI Venture, the private equity arm of ICICI Bank, invested $26 million for a 10 percent stake, valuing Devyani at $260 million

in 2011 That valuation has surged, notes Prashant Purker, private equity co-head at ICICI Venture Investors have seen the pace of business expansion and the lofty value of close rival, $1.3 billion (market cap) Jubilant FoodWorks, which has the franchises for Domino’s Pizza and Dunkin’ Donuts, with a network of 560 stores Jaipuria, typically, is looking for more—and biding his time to list Devyani as well Abneesh Roy, associate director at Mumbai firm Edelweiss Financial, says that with Jubilant trading at 40 times 2014 earnings, fast food remains a draw for investors: “Consumption is a hot sector Growth rates will accelerate.” Jaipuria has been betting on that growth since the outset “I’ve known Ravi for 22 years, first with PepsiCo and now with Yum He’s never fallen short of a target and

is always looking to expand,” says Micky Pant, chief executive of Yum Brands International, who was earlier with PepsiCo India

In 1997 PepsiCo named Varun Beverages ‘Bottler of the Year’; Jaipuria proudly displays a framed photograph of himself receiving that award from former President George HW Bush at

a PepsiCo event in Hawaii

Jaipuria has business in his genes His father, Chunni Lal Jaipuria, and his uncle Mahavir Prasad Jaipuria were involved in trading textiles (as distributors for Raymond) and banking His father co-founded the Bank of Rajasthan, which he later sold In the 1960s Chunni Lal Jaipuria got the bottling franchise for Coca-Cola after a chance meeting with a Coke executive in Atlanta When Coke left the country in 1977 following an anti-multinational wave, the Jaipurias switched to bottling Thums Up, a local brand Ravi, the youngest of three

“IN ThE NOrTh, pEOpLE wILL drINk A

whOLE BOTTLE ELsEwhErE, pEOpLE

TENd TO shArE ANd wE hAvE TO

cOmpETE wITh cOcONuT wATEr”

/ asia-pacific /

brothers, went abroad to study,

getting an undergrad degree in

business management in New York

He settled in Montreal with a small

venture in textiles and real estate

The death of his wife in a plane crash

in 1985—she was going to Delhi to

bring back their daughter—made

him return home for good, where

he eventually remarried (He did,

however, retain some ties to Canada

by maintaining his home and status

as a Non Resident Indian, though he

never gave up his Indian citizenship.)

In 1987 Chunni Lal divided the

business among his three sons Ravi

got one bottling plant in Agra as

his share and says he has built his

empire up from there In 1991, two

years after PespiCo entered India,

he switched allegiances and has

stayed with Pepsi since (His brothers

did likewise.) He admits to being

the most ambitious of his siblings

Jaipuria expanded into fast food by

picking up the franchises for KFC

and Pizza Hut, which were then with

Pepsi Co, even though his father, a

staunch vegetarian, was against it

Jaipuria’s thirst for growth is

matched by his appetite for risk “Ravi

was the most active and enthusiastic

among our bottlers,” says PM Sinha,

a former Pepsi-Co India chairman

That quality proved useful in

dealing with the rough turns in his

businesses Fast food, for example,

was hardly an instant success

When KFC opened in India in 1995

it was met with a volley of protests

from farmers Pepsi, like Coke, has

often been the target of the

anti-multinational lobby In 2006 the

soft drink majors saw sales plummet

when an environmental group

reported traces of pesticides in their

colas Jaipuria recalls that period as

a “tough time” that compelled him

to look for other growth avenues

He’s built a reputation for a

willingness to tap difficult markets, notably in Africa, where he has interests in bottling, fast food and dairy Jaipuria sees Africa as the next big market after India “It’s a wide patch, and how big you can

be depends on how much you can handle.” He hopes to expand RJ Corp’s presence there from nine countries currently to 20 by 2015

Jaipuria’s African safari had its shaky moments In 2003, on his first business trip to Angola, a prospective partner whom he was accompanying was murdered in his hotel room

Jaipuria, who was staying at the same hotel, took refuge at the Indian ambassador’s house until his safe

passage back home was arranged

In the past decade, as Jaipuria has stepped up his game, RJ Corp has entered new areas In 2007 it formed

a beer joint venture, Anheuser-Busch InBev India, in which Jaipuria has

a 51 percent stake Another business

is dairy, under which he owns Devyani Food Industries, which sells Cream Bell ice cream in India

His other venture in the same space

is Sameer Agriculture & Livestock,

a dairy joint venture in Uganda

While Jaipuria has remained largely focused on businesses he knows best, he has lately made unusual investments that suggest a dilution of focus But Jaipuria insists that RJ’s emerging businesses, in areas such as education and health care, are his wife Dhara’s domain It has Cryobanks International India, which offers stem cell banking

services, and two schools under the Delhi Public School franchise, with

a new school coming up RJ’s latest venture is a franchise for Nike that Jaipuria’s son is spearheading

Is the ace bottler spreading himself too thin? Jaipuria maintains that all his businesses are run by professional managers, many of whom have stayed loyal Fast food head Joshi was almost poached by Starbucks but opted to stay back Additionally, he’s sought out experienced senior hands with international experience such as Chris White, a former Nestlé executive who was made group CEO in 2008

“I’ve known Ravi since he had just one shed in Agra and was loading

trucks himself He’s always looking for the next big thing,” says White While Jaipuria insists that RJ Corp has moved with the times and is ready

to make a public splash, he prefers

a low profile for himself and shuns modern gizmos such as smartphones and computers Jaipuria carries a vintage cellphone and insists reports

be faxed to him wherever he is

He spends half his time travelling overseas (partly to maintain his non-resident status) and is planning

to set up a base in Singapore In Delhi Jaipuria lives in the elite Lutyens area in a house that was once part of a joint family estate before it was divided three ways

by the brothers a few years ago

As for his love for water, he has bought a beachfront house

in Goa but, unsurprisingly, doesn’t go there too often

“I’vE kNOwN rAvI fOr 22 yEArs, fIrsT wITh pEpsIcO ANd NOw wITh yum

hE’s NEvEr fALLEN ON A TArgET ANd

Is ALwAys LOOkINg TO ExpANd”

Any reporter who shows an

interest in Prince Alwaleed Bin

Talal of Saudi Arabia can expect

at some point to get a little gift

from His Royal Highness A driver will

courier over a thick, tall green leather

satchel, embossed with the oasis palm

logo and name of Alwaleed’s Kingdom

Holding Co, weighing at least 10 pounds

Like Russian nesting dolls, the green

leather satchel reveals a green

leather-bound sleeve, which in turn encases

a green leather-bound annual report

About the only thing not shrouded in

leather are thin versions of a dozen of

the best-known magazines in the world,

each boasting the prince on its cover

These magazines are the most telling

items within the prince’s big-bucks

information dump Fronting Vanity Fair,

he strikes a jet-set pose, complete with

reflective sunglasses, a powder-blue

sports coat and an open-collar shirt

He’s on two Time 100 covers, once in a

collage with the likes of George Soros, Li

Ka-shing and Queen Rania, and a second

solo, donning the classic Saudi thobe

and ghutra There’s even a Forbes, from

which he stares out powerfully, in a Steve

Jobs black turtleneck, above the text

‘The world’s shrewdest businessman’

But the most instructive piece of

information is consistent across them all:

None are real Rather than simply send out press clippings, the prince’s staff has concocted or rejiggered magazine covers, which they bind atop article mentions on beautiful high-gloss paper.Image is everything to Prince Alwaleed, with specific care paid to those who can provide outside validation He meets with very important people Just ask him His staff issues a press release with a photo seemingly every time he interacts with someone big (Bill Gates), someone who might someday be big (Twitter CEO Dick Costolo) or just someone who sounds big (Burkina Faso’s ambassador to Saudi Arabia) In 2003

he was photographed behind George

W Bush, Jordan’s King Abdullah, Saudi Crown Prince Abdullah and Egyptian President Hosni Mubarak When

his authorised biography, Alwaleed:

Businessman, Billionaire, Prince, appeared

in 2005, that photo appeared on the back cover—this time with Alwaleed in front, courtesy, the prince later admitted to

Forbes, of Photoshop For several months beginning in late 2011, the prince even began blind copying me almost daily

on text messages he sent: Some were

to the spouse of a European president; others to a well-known CEO at a large US technology firm; still more were to the hosts ofseveral cable-TV talk shows The

/ The middle easT / africa /

Prince of

insecurity

Prince Alwaleed says he’s one of the 10

richest people in the world Forbes doesn’t buy it

By Kerry a dolan;

Photograph By Ben BaKer/redux for forBes at the Plaza hoTel new yorK

contents were shared off the record—

but the intent to impress was not

In terms of outside validation,

though, his paramount priority,

according to seven people who used

to work for him, is Forbes’ list of

global billionaires “That list is how

he wants the world to judge his

success or his stature,” says one of

the prince’s former lieutenants, who,

like almost all his ex-colleagues,

spoke on the condition of anonymity

for fear of reprisal from the

Arab world’s richest man “It’s a

very big thing for him.” Various

thresholds—a top 20 or top 10

position—are stated goals in the

palace, these ex-employees say

But for the past few years former

Alwaleed executives have been

telling me that the prince, while

indeed one of the richest men in the

world, systematically exaggerates

his net worth by several billion

dollars This led Forbes to a deeper

examination of his wealth, and a

stark conclusion: The value that the

prince puts on his holdings

at times feels like an alternate

reality, including his publicly

traded Kingdom Holding, which

rises and falls based on factors

that, coincidentally, seem more

tied to the Forbes billionaires

list than fundamentals

Alwaleed, 58, wouldn’t speak with

Forbes for this article, but his chief

financial officer, Shadi Sanbar, was

vociferous: “I never knew that Forbes

was a magazine of sensational

dirt-digging and rumour-filled stories.” Our

discrepancy over his net worth says a

lot about the prince, and the process

of divining someone’s true wealth

the prince first came on Forbes’

wealth-hunting radar in 1988, a year after our first Billionaires issue came out The source: The prince

himself, who contacted a Forbes

reporter to let him know just how successful his Kingdom Establishment for Trading & Contracting company was—and to make clear that he belonged on the new list

That outreach proved to be the first in what is now a quarter-century

of intermittent lobbying, cajoling and threatening when it comes to his net worth listing Of the 1,426 billionaires

on our list, not one—not even the vainglorious Donald Trump—goes

to greater measure to try to affect his or her ranking In 2006 when

Forbes estimated that the prince was actually worth $7 billion less than

he said he was, he called me at home the day after the list was released, sounding nearly in tears “What do you want?” he pleaded, offering up his private banker in Switzerland

“Tell me what you need.” Several years ago he had Kingdom Holding’s CFO fly from Riyadh to New York a few weeks before the list came out

to ensure that Forbes used his stated

numbers The CFO and a companion said they were not to leave the editor’s office until that commitment was secured (After a granular discussion the editor convinced them

to leave with a promise to review everything.) In 2008, I spent a week with him in Riyadh, at his behest, touring his palaces and airplanes and observing what he told me was

$700 million worth of jewels

Keeping up with Prince Alwaleed,

as I learned during my week with him,

requires fortitude—and caffeine He stays up nightly until roughly 4.30 am, before catching 4 or 5 hours of sleep and repeating the drill “Whoever worked with the prince had no life,” recalls an early former employee

“The working hours were extremely odd: 11 am to 5 pm and then 9 pm to 2 am.” Even his twentysomething wife must fit into this schedule (she’s his fourth bride, though he’s only been married to one at a time); when I was there she would be chauffeured home nightly to her own palace in

a midnight-blue Mini Cooper

The daily surroundings are absurdly opulent His main palace in Riyadh has 420 rooms, filled with marble, swimming pools and portraits of himself If he needs to go on a business

trip, he has his own 747, à la Air Force

One, except unlike the President, his plane has a throne If Alwaleed wants

a change of pace, he can go to his acre “farm and resort” at the edge of Riyadh, complete with five artificial lakes, a small zoo, a mini-Grand Canyon, five homes, 60 vehicles and several outdoor spots designed for his entourage to take dinner together.That meal is very important to Alwaleed To keep trim he eats one main meal a day, at about 8 pm, though given his body schedule he calls it

120-“lunch” He’s flanked on one side by his entourage of “palace ladies”, who run whichever house he’s in, and on the other side by male attendants All eyes in the semi-circle are usually centred on a television And lest anyone forget the prince’s focus, that television is usually tuned to CNBC.This ambition, albeit in gilded form, was in many ways a birthright

If ever someone carried a burden to succeed, it’s Prince Alwaleed, the grandson of the founding fathers of two separate countries His maternal grandfather was the first prime minister of Lebanon His paternal

Of the 1,426 billiOnaires On Our list,

nOt One gOes tO greater measure

tO try tO affect his Or her ranking

/ The middle easT / africa /

SOURCE: INTERACTIVE DATA VIA FACTSET RESEARCH SYSTEMS.

KINGDOM HOLDING’S SHARE PRICE

ISSUE DATE 29/3/10 ISSUE DATE28/3/11 ISSUE DATE26/3/12 ISSUE DATE25/3/13

Up 57% over the 2½ months prior to Forbes 2010 list

Up 31% over the 2½ months prior to Forbes 2011 list

Up 56% over the 2½ months prior to Forbes 2012 list

Up 21% over the 2½ months prior to Forbes 2013 list

grandfather, King Abdulaziz, created

Saudi Arabia “That puts him in a

place where he has to prove himself

to be first at something,” says Saleh Al

Fadl, an executive at Saudi Hollandi

Bank who worked under Alwaleed

for many years beginning in 1989 at

the prince’s United Saudi Commercial

Bank While his cousins in the House

of Saud responded to similar pressure

by filling Saudi Arabia’s political

class—one serves as interior minister,

while others serve as governors—

Alwaleed, Al Fadl says, “wanted to

prove himself in the business area”

Alwaleed’s father, Prince Talal,

had a mind for business, serving

as Saudi Arabia’s reform-minded

finance minister in the early 1960s,

before he was driven into exile due

to his progressive views During that

same period, when Alwaleed was

7, he separated from his wife, the daughter of the original Lebanese prime minister, who returned to her country with the young prince

There he had a habit, according to his authorised biography, of running away for a day or two and sleeping in the back of unlocked cars Alwaleed wound up attending military school in Riyadh, picking up a strict discipline he adheres to even now

The prince acquired a Western outlook in college, attending Menlo College in Atherton, California

When he returned to Saudi Arabia,

he became known as the guy foreign companies could do business with

if they needed a local partner His standard explanation about how he got started is that he got a $30,000 gift from his father and a $300,000 loan and a house While it’s unclear, even

in his biography, how much else he got from his family, it was presumably

a lot, since by the time he was 36,

in 1991, he was positioned to make the high-stakes business decision that would define him As regulators pressured Citicorp to increase its capital base in the face of bad loans across developing countries, Alwaleed, then unknown outside Saudi Arabia, amassed a $800 million position

That enormous bet ballooned across two Wall Street boom cycles—by

2005 it was worth $10 billion, making Alwaleed, at the time, one of the

10 richest people in the world, and earning him a nickname, which he encouraged, of “the Buffett of Arabia”.But unlike Warren Buffett, who has picked winner after winner for decades, Alwaleed has not proven to

be a consistent investor Over the past

Shares of Prince Alwaleed’s Kingdom Holding show a recurring pattern of sharp jumps right before the Forbes billionaires list

same time next year

20 years he has backed some serious

dogs, such as Eastman Kodak and

TWA High-profile media investments

(Time Warner and News Corp)

turned in middling performances And

while there were also big winners,

notably eBay and Apple, Alwaleed

missed out on another jackpot when

he dumped much of his holdings in

the latter in 2005 In other words,

Alwaleed has yet to repeat what he

pulled off with the Citi investment

“That was his huge deal and what put

him on the map It was a big risk, a

big number, a big bank,” an executive

formerly close to Alwaleed told

Forbes “Nothing he’s done since has

been anywhere near that caliber.”

Nonetheless, in Alwaleed’s

hyperbolic world, ambiguity doesn’t

translate Kingdom Holding’s website

opens with five large, bold words: “The

World’s Foremost Value Investor.”

When the prince decided to take

Kingdom Holding public in

July 2007, the move, on paper,

seemed puzzling While the CFO cites

the usual reasons for going public, the

prince already owned the company

100 percent It was filled with holdings

that were already publicly traded, and

he floated a measly 5 percent In other

words, he had no partners to satisfy, no

liquidity issues and no desire to raise

major capital—the three major reasons

to do an IPO and accept the headaches

that come with a public company

The shares, listed on the Saudi

stock exchange, are thinly traded

No analysts actively follow it Inside

the company the attitude seemed

more akin to the vanity magazines

his staff produces “[It was] for the

sport of it,” says the early Alwaleed

employee “It’s fun to go public You

have lots of media buzz around it.”

Of course, that media buzz is only

“fun” if the stock is performing well

The prince, ever image-conscious,

had no doubt it would “I am very pleased that the IPO continues to go

strongly,” he told the Arab News the

day the shares were offered “This indicates that Saudis are recognising the potential of the No 1 company

in the Kingdom.” No matter that oil behemoth Saudi Aramco has pumped the economy full of cash and supported legions of royal family members for decades “His vision is to

be the top-tier wealthiest recognised individual and a public figure, and this he has achieved,” says Al Fadl of Saudi Hollandi Bank “Maintaining

it would be the toughest challenge.”

That would prove true shortly after the IPO At the offering, which valued Kingdom at $17 billion, the majority of the company consisted

of those Citi shares, worth nearly

$9.2 billion But the summer of

2007 marked the beginning of a long, steep decline, accelerated by the worldwide financial crisis Citi shares have lost 90 percent of their value since July 2007 Kingdom Holding shares tumbled between early 2008 and early 2009, falling 60 percent That erased $8 billion of the prince’s fortune, knocking his net worth down to a mere $13.3 billion

on the 2009 Forbes billionaires list.

But then Kingdom Holding shares began what seemed a miraculous rebound in early 2010, rising 57 percent in the 10 weeks prior to the

February date that Forbes used to lock

in values for that year’s Billionaires list, as Citigroup shares fell about

20 percent The prince’s ranking on

the Forbes billionaires list surged

in lockstep to 19th ($19.4 billion)

In 2011 the pattern repeated In the

10 weeks before Forbes locked down

its list, Kingdom Holding shares rose

31 percent while the Saudi index was

up 3 percent and the S&P 500 was

up 9 percent over that same period (Prince Alwaleed finished at No

26 in the world that year, with an estimated net worth of $19.6 billion.)

It happened yet again in 2012, when Kingdom shares climbed 56 percent while the Saudi market was up just

11 percent, and the S&P 500 was up 9 percent (This time Alwaleed was No

29, with a $18 billion valuation, after

Forbes discounted his claims on many

of his non-Kingdom Holding assets.) During this time period several former executives close to Alwaleed

began telling Forbes a consistent

story: The prince was using his public vehicle to inflate his net worth Their accounts were based on closely watching the stock, versus direct evidence But one executive said

he could not figure out any other explanation for why the shares went

up dramatically at the same time the key asset, the large Citi stake, tanked

What the prince says he’s worth ($29.6 bln) versus what we say ($20 bln)

REAL ESTATE AND JEWELRY BOEING 747, CARS PRIVATE HOLDINGS

KINGDOM HOLDING

INVESTMENTS IN FURNITURE, FIXTURES

EQUITIES/

REAL ESTATE HOTELS

HOTEL MANAGEMENT COS.

($MLN, AS OF FEB 14, 2013) SOURCES: PRINCE ALWALEED, KINGDOM HOLDING; FORBES.

We BeG to Differ

/ The middle easT / africa /

“This is the national sport,” says an

early Alwaleed executive, in offering

an explanation for the stock’s wild

gyrations “The players are not many

They come in with big funds, and they

buy from each other There are no

casinos It’s the gambling site of the

Saudis.” Says an analyst who follows

Saudi Arabia, but requested anonymity

because his opinions would erode his

relationships: “It’s incredibly easy

to manipulate,” and especially easy

if, like Kingdom Holding, “you have

a small free float.” Responds CFO

Sanbar: “No one can rationalise any

short-term fluctuations in the share

price or the market directions.”

Whatever the driver, this past year

has topped them all In 2012 Kingdom

Holding’s net income grew by just

10.5 percent to $188 million, the Saudi

index rose 6 percent and the S&P

went up 13 percent, yet Kingdom’s

shares jumped 136 percent Sanbar

credits “market confidence in the

company’s sustained ability to deliver

and realise substantial value to its

shareholders.” Kingdom Holding

now trades at a rich 107 times trailing

earnings, not exactly the province of

a value investor like the prince It’s

not an unheard-of valuation; Amazon

trades at 224 times its pre-tax 2012

income Sanbar also points out that

there were numerous other stocks

on the Tadawul exchange that were

up more than 130 percent in 2012

The problem with Kingdom is

reconciling this share performance

with the underlying assets or the

fundamentals One-fifth of Kingdom’s

net assets are passive equity

investments in stocks that trade at

multiples 82 percent below that of the

holding company And there’s scarcely

a reason for an investor to buy into

the rest, since it’s near impossible to

know exactly what the company owns

When the company went public, it

issued a detailed 240-page prospectus

listing the number of shares owned

in 21 stocks, most of which were US firms like News Corp, Apple and Citi,

as well as stakes in various hotels and real estate in Saudi Arabia But while the prince’s press department issues

a release almost daily on who he meets, the annual reports and financial statements in recent years failed to provide the names of the stocks or holdings the company currently owns, not even its 7 percent of News Corp voting shares (We know it owns this because of News Corp’s SEC filings.)Concerns about the divide between the price and the underlying assets were raised by Kingdom’s auditor, Ernst & Young In 2009 and 2010 it signed off on the company’s books but noted in both years a large difference between the market and holding value of the stock It was

such a large difference, the auditor noted, that the prince had to inject

180 million personal shares of Citi, worth perhaps $600 million, at no cost to Kingdom, simply to reduce pressure to mark down assets In other words, the prince was moving assets he owned privately 100 percent into a public vehicle he owns only 95 percent for no consideration, in order

to prop up the books, and presumably the stock What did Ernst & Young have to say in 2011? Nothing As

of March of that year, it was gone, replaced by PricewaterhouseCoopers

at the annual meeting

Sanbar told Forbes that no shares

had been sold since 2008—but we don’t know what shares, if any, might have been sold between July 2007 and the end of 2008 Kingdom did issue a press release in January 2012 stating

The region now has billionaires from 12 countries, as Angola and Swaziland welcome their first

TOTAL NET WORTH $279 BILLION DOLLAR CHANGE FROM 2012 $48 BILLION PERCENT CHANGE FROM 2012 20.77% AVERAGE NET WORTH $2.7 BILLION

Countries With the Most Billionaires Top Ten Industries

TOTAL NUMBER OF BILLIONAIRES 2012:

/ The middle easT / africa /

that it had invested $300 million in

Twitter— an investment split between

Kingdom Holding and the prince’s

personal funds Sanbar confirmed

that stakes in Apple, eBay, PepsiCo,

Priceline, Procter & Gamble and a

few others had not changed But as

an investor in Kingdom you wouldn’t

know that by reading the company’s

annual report A footnote on the 2012

financial statements lists unaudited

net equity assets of $2.1 billion and one

sentence: “The activities of the Equity

segment are mainly concentrated in

the United States of America and the

Middle East.” That minimal amount

of disclosure “certainly wouldn’t

fly in the US on the grounds of

common sense,” says Jack Ciesielski,

the publisher of The Analyst’s

Accounting Observer newsletter

Sanbar’s response? “We are

not a mutual fund and there is

no requirement whatsoever that

we disclose to anyone the share

make-up of our portfolio.”

While public companies are almost

always a market-proven determinant

of net worth, in light of Kingdom’s

opacity, small float and thin,

questionable trading, Forbes decided

to focus on the underlying assets We

estimated the earnings from its stakes

in the Four Seasons, Mövenpick and

Fairmont Raffles hotel management

companies and, working with a

hotel-industry investment banker, applied

a generous public-company multiple

We also came up with a value, net

of debt, for the stakes in more than

15 hotels owned by Kingdom

Based on the other parts we

can identify, including Saudi real

estate and a basket of US and

Middle East equities, we value his Kingdom Holding stake at $10.6 billion, or $9.3 billion less than what the market cap suggests

Even crediting the prince with most of the $9.7 billion of assets he claims outside of Kingdom—Sanbar listed $4.6 billion of appraised Saudi real estate; $1.1 billion in Arab

media companies (which Forbes

discounted because the prince uses

a net present value of future profits, while we use a multiple of current earnings); and a nonspecific $3.5 billion of investments in public and private companies globally—and even including various planes, yachts, cars

and jewels, Forbes cannot justify an

estimate of more than $20 billion Still the richest man in the Arab world

Still $2 billion over last year But

$9.6 billion less than what the prince

insists And while Forbes prides itself

on conservative estimates, in this case,

we believe the proceeds in a down would, if anything, be less

wind-Aweek before Forbes finished

its tabulations, the prince directly charged his CFO with

making sure the 2013 Forbes listing

would be to his liking: Specifically

$29.6 billion, which would return him to the top 10 position he has craved The direct order to Sanbar, according to someone outside the company who is privy to the prince’s thinking and specific language on this matter, was to get “nasty”

What followed were four detailed letters from Sanbar attacking our reporters and our methodology for unfairly singling out the prince for

scrutiny “Why does Forbes apply

different standards to different billionaires, does that depend on national origin?” Sanbar wondered

In one letter Sanbar insisted that Kingdom’s holdings have soared

in value, without offering detail

He did mention that Kingdom has reduced unrealised portfolio losses

by almost $1 billion since 2008 In another letter he says that Kingdom’s

2007 IPO was scrutinised for 12 months by the Saudi Capital Market Authority “This strikes in the face of improving Saudi-American bilateral

relations and co-operation Forbes

is putting down the Kingdom of Saudi Arabia and that is a slap in the face of modernity and progress.”Finally, Sanbar insisted that Alwaleed’s name be removed from

the Billionaires list if Forbes didn’t

increase its valuation of the prince

As Forbes asked increasingly specific

questions in the process of checking this story, the prince acted unilaterally the day before it was published, announcing through his office that he would “sever ties” with

fact-the Forbes billionaires list “Prince

Alwaleed has taken this step as he felt he could no longer participate

in a process which resulted in the use of incorrect data and seemed designed to disadvantage Middle Eastern investors and institutions.”

“We have worked very openly

with the Forbes team over the years

and have on multiple occasions pointed out problems with their methodology that need correction,” Sanbar said in the statement

“However, after several years of our efforts to correct mistakes falling

on deaf ears, we have decided that

Forbes has no intention of improving the accuracy of their valuation of our holdings and we have made the decision to move on.” And how did Prince Alwaleed convey this message? By press release

“this is the natiOnal spOrt there

are nO casinOs it’s the gambling

site Of the saudis”