Joining the Global Ranks of Wealth Creators

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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

CONTENTSCONTENTS

■ 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 Emerging Markets: Forbes Insights and Joining the Global Ranks of Societe Generale Wealth Creators—Africa, Central Private Banking & Eastern Europe, Middle East would like to extend analyzes 250 fortunes in these their thanks to the billionaire and up-and-coming regions. The multimillionaire

SUMMARY report is also based on inter- businesspeople who views with billionaires from shared their time and these emerging markets, as well expertise with us: as editors of Forbes local lan-

guage editions, and Forbes and ■ Sudhir Ruparelia, Forbes.com wealth analysts. Doctor of Business Administration, Chairman, Ruparelia Emerging-market fortunes Group, UGANDA differ from those in mature mar-

EXECUTIVE EXECUTIVE kets in terms of the openness of ■ Jan Kulczyk, Ph.D., ultra high net worth individuals Founder and Chairman, (UHNWIs) about their holdings Kulczyk Investments, and fortunes, as well as their POLAND countrymen’s attitudes toward 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 guage of business, but they often see their their see often they but business, of guage lan- global acommon, speak billionaires that wealth creation is a positive phenomenon. a is positive creation wealth that countrymen their convince to entrepreneurs for battle uphill an still itis countries some In attitudes. varied in resulted histories, national own their as well as markets, free embraced countries particular which with speed in diff the time, same the at roughly happened Europe Eastern and Central in change system the although instance, ranks of global billionaires. ofglobal ranks the have joined East Middle the and Europe Eastern and Central ofAfrica, markets ing ◆ this report are are report this for studied fortunes ing-market ◆ among individual nations. wealth creation greatly vary ◆ their countrymen toward them, of attitudes the with directly correlates fortunes their about ◆ generation. with Russia being 100% such as the United States and Western Europe. Europe. Western and States United the as such markets, mature of levels the to up yet not are they However, breathtaking. be can decades, over two just in cases some in there, ated cre- been have that fortunes individual the of trymen accept them. coun- their more the fortunes, their about are mature markets. in than report this for studied markets ing emerg- for lower are these of both and

Businesspeople inBusinesspeople the emerg- The majority (78%) ofemerg- majority The and wealth toward Attitudes wealthy ofthe openness The The emerging markets’ markets’ emerging The

The more open the wealthy wealthy the open more The ﬁ rst-generation, rst-generation, erences erences ﬁ rst- For Some

ties, with which they strongly identify. identify. strongly they which with ties, communi- and homelands their to back circle to away as business global in participation these areas. approach how they in trailblazers often are billionaires the philanthropic, are some and investments, are pursuits these of some While Africa the lowest. the Africa and Europe Central and display, of levels est high- the having Russia and East Middle the with display, wealth to regard with regions and countries emerging among ferences markets. mature from those than stated under- more slightly are markets ◆ of global billionaires. ranks the joining than tougher is ◆ ing markets ahead, markets ing emerg- vault will that industry ◆ report. this for studied markets of billionaires from emerging pursuits top the among are tics ◆ account for 14% of the world’s billionaires. 14% for world’s the of account regions these from billionaires However, East. Middle the or Africa Europe, Eastern and Central from billionaires by owned co- or owned are companies public largest international, just 6% are report this for studied businesses of ity resources forresources growth. natural or labor oninexpensive rely to need not do who producers high-value-added into

The wealthy from emerging emerging from wealthy The aBuilding top global business Technology is seen as the the as seen is Technology poli- and philanthropy Sports,

However, there are vast dif- vast are there However,

of the world’s 2,000 2,000 world’s the of transforming them them transforming

FORBES INSIGHTS FORBES

| 3 he world is currently going and Western Europe, but they are catching through twin gilded ages, up fast considering the short timespan since points out Chrystia Freeland their inception. in her book Plutocrats, The Apart from the size of the fortunes, there Rise of the New Global Super- are ways in which going through a burst of RichT and the Fall of Everyone Else. wealth creation for the fi rst time can be a For the Western, mature markets, this is disadvantage, as emerging markets are still the second time a gilded age is taking place. building regulatory institutions, business The fi rst gilded age happened during the late practices and political systems, which mature Industrial Revolution, in the 19th century. It markets have been strengthening over the last is known as the Gilded Age due to the huge century. fortunes amassed at the time. Today many of the countries in emerging markets are industrializing or have replaced their planned communist or socialist econo- AVERAGE SIZE OF FORTUNE OF mies with free, or freer, markets, making the

INTRODUCTION current twin gilded ages a political phenom- THE 20 RICHEST INDIVIDUALS enon in regions such as Central and Eastern Europe as well as Africa. In mature markets much of the engine of the current gilded ● United States: $24.3 billion age comes from the burst in technological advancement, which serves as a global eco- ● Western Europe: $20.1 billion nomic accelerant for all markets. In his book The Next Convergence: The ● Russia: $10.1 billion Future of Economic Growth in a Multispeed World, Michael Spence, winner of the Nobel ● Middle East: $7.6 billion Prize in economic sciences, points to the historic proportions of this convergence in ● Central & Eastern Europe: $3.2 billion wealth creation. Back in 1950, 750 million people lived in industrializing countries ● Africa: $2.3 billion and the remaining 4 billion-plus were left behind, Spence writes. ● Turkey: $2.0 billion “Today we are at a midpoint in the process of two parallel interacting revolutions: the continuation of the Industrial Revolution in SOURCE: FORBES 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 The wealth creators in emerging markets 75 percent or more of the world’s people live are working at gaining acceptance by their in advanced countries with all that it entails.” countrymen. They are competing around This report analyzes this fi rst wave of the world to build global brands, investing wealth creation in several of the world’s to enrich not just themselves but also their emerging markets—Central and Eastern countries, and following pursuits such as Europe, Africa and the Middle East. sports and philanthropy. This report looks at Businesspeople in these regions have the challenges they face in joining the global joined the ranks of global billionaires. In fact, ranks of wealth creators and how they over- some of the individual fortunes that have come them, as well as the advantages they been created there, in some cases in just over have as entrepreneurs from regions where two decades, are breathtaking. They are not they have had to be more resourceful in cre- yet up to the levels of the largest fortunes in ating their businesses mostly from scratch, mature markets, such as the United States and with fewer models to follow.

4 | EMERGING MARKETS “In our continent, a balance between commercial success and an investment back into society is important in shaping a positive attitude.” — STEPHEN SAAD, CEO, ASPEN GROUP, SOUTH AFRICA ATTITUDES

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 penness aboutbhii the origin the origins of many of the emerging-market and size of fortunes is lower fortunes—and the fact that many of them are in emerging markets than it still so new that the origins are not forgotten, is for ultra high net worth mired in history or tempered by the subsequent individuals (UHNWIs) in philanthropic benevolence of the founders. matureO markets. On a scale from 0 to 10, with Historically, fortunes tend to be built in waves, 0 being not open at all and 10 being very trans- brought about by industrial or political revolu- parent, the Forbes Wealth Panel assigned the tions, and their fi rst decades are usually messy. emerging markets analyzed for this report a score Industrial revolutions unleash productivity via of 4.2, and mature markets a score of 7.3. new technology; political ones can do the same The openness of the wealthy about their thing by loosening the old elite’s grip on an fortunes correlates directly with the attitudes of economy, thus creating fresh space for entrepre- their countrymen toward them. The more open neurial activity. the wealthy are about their fortunes, the more The most successful businessmen who their countrymen accept them, and vice versa. built their fortunes during the Industrial OPENNESS & SOCIAL & OPENNESS In terms of social attitudes towards great wealth, Revolution—such as J.P. Morgan or J. D. the gap between the emerging and mature Rockefeller—were during their careers referred to as robber barons, for what their critics perceived as amassing wealth in a way that robbed RANKED ON A 0-10 SCALE the rest of society. As time goes by and the emerging markets Openness About Wealth develop, the biggest fortunes should become more transparent, which should lead to improvement in Mature Markets vs. Emerging those societies’ perceptions of wealth creators. Markets: 7.3 vs. 4.2 Western societies may not be all positive about their wealthy, even though they have had the time to get used to the diff erences in income levels. But in many emerging countries, espe- Attitudes Toward Wealth Creators cially in Eastern Europe, used to the seeming equality of socialism, under which everybody Mature Markets vs. Emerging was more or less equally poor, the income gap Markets: 6.3 vs. 4.1 between the average population and the very wealthy—which is currently exacerbated by SOURCE: FORBES INSIGHTS WEALTH PANEL hard economic times—is coming as a shock.

RANKED ON A 0-10 SCALE Openness About Wealth In Central and Eastern Europe: 3.9

Attitudes Toward Wealth Creators

In Central and Eastern Europe: 3.8

SOURCE: FORBES INSIGHTS WEALTH PANEL

In Central Europe and Russia, the trigger down to the matter of personal wealth but for wealth creation was transitioning from that it also means new workplaces, taxes paid communism to free markets just two decades to the state budget, economic growth, pri- ago. The overall score for openness that vate patronage. To everyone’s benefi t.” Forbes wealth analysts give Central Europe is Moreover, attitudes toward wealth in 3.9, and the social attitudes are at 3.8. There Poland have improved since the early stages are vast diff erences among the countries, of post-communist fortune creation, when depending on how fast and how masterfully businesspeople were considered as suspect, they handled the transition to free markets agrees Jacek Pochlopien, deputy editor of and democracy. Leading the way are coun- Forbes Poland. “About fi ve to eight years CENTRAL & EASTERN EUROPE EUROPE & EASTERN CENTRAL tries such as Poland and the Czech Republic, ago, I realized that something was changing,”

which get the highest scores, while south- says Pochlopien. “Many Polish people started eastern Europe is still lagging. to work independently, they became entrepreneurs, so now the attitude of the general OPENNESS& SOCIAL ATTITUDES: an Kulczyk, international population toward wealth started to change.” businessman (net worth: $2.7 The entrepreneurial bent of the Polish billion, according to Forbes), people has been confi rmed by a Forbes explains his countrymen’s atti- Insights/ACCA report titled “Nurturing tude toward wealth creators in Europe’s Spirit of Enterprise.” Poland:J “Poland is still working its way up, Based on a survey of 1,245 European with the mental heritage from the social- executives, the report found that Polish ist era but also with great aspirations. Wealth respondents were most likely to say that they creators trigger mixed emotions, but I do had championed an innovation. They were not think this phenomenon to be much dif- also more likely to say that they had succeeded ferent from the European average. In recent in getting the innovation implemented. UK, years, the middle class has been developing German and Swiss executives were least likely in Poland, successful people who also work to say that they had proposed an innovation. in other countries, for whom being rich is The entrepreneurship of the popula- not automatically equal with being suspi- tion correlates with bigger acceptance for the cious. More and more people realize that the wealthy in Poland. Pochlopien now ranks success of entrepreneurs does not only come social attitudes toward the rich at 6, while

6 | EMERGING MARKETS

in 2000 he would have given them a 4: a For that to happen “businessmen need two-point rise in a decade. to understand the challenges of society and Victor Pinchuk, a Ukrainian bil- contribute to solving them,” he says. He lionaire who—with a net worth of $4.2 tries to anticipate changes aff ecting soci- billion—was ranked by Forbes as the 255th ety, stay ahead of them and help address richest person in the world in 2012, is well them. As an example, Pinchuk gives the new aware of the tough transition to free mar- metallurgical plant his company opened in kets that some of his countrymen faced Dnepropetrovsk in October 2012: it com- once communism collapsed. “Today in bines cutting-edge production methods, Ukraine many people struggle to survive. measures designed to save energy and pro- Older ones often see the breakdown of tect the environment, investment in staff , the Soviet system as a loss of stability and as well as contemporary artworks and social security for average people, and therefore a programs for the district where it is located. certain hostility to quickly acquired wealth Sums up Pinchuk: “Ukrainian business needs is, from their point of view, quite under- to communicate better with the society in standable at the fi rst look,” he says. which it is embedded.” In some countries it is still an uphill owever, Pinchuk battle for entrepreneurs to convince their believes that “Ukrainian countrymen that wealth creation is a posi- business has played a tive phenomenon. Iordan Mateev, editor very constructive role of Forbes Bulgaria—who also notes the since Ukraine became murky beginnings of some Bulgarian independent,H regardless of mistakes that fortunes—points out that the negative have been made. It has worked hard to perception affects all wealthy individu- create value for society, and it has also als. “Even the honest businessmen are not increasingly contributed to solving social transparent, because the public hates rich problems. I hope we will manage to con- people and believes not one has gotten vince ever more people,” he adds. rich honestly,” he says. CENTRAL & EASTERN EUROPE EUROPE & EASTERN CENTRAL

OPENNESS& SOCIAL ATTITUDES: “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 KULCZYK, CHAIRMAN, KULCZYK INVESTMENTS, POLAND

lthough the system change privatization of the 1990s is regarded by in Central and Eastern many as unjust,” says Kashulinsky. Europe happened roughly Attitudes toward the wealthy are further at the same time, the diff er- harmed by the current recession in Europe. Just ences in speed with which as the wave of fortune-building is happening in particularA countries embraced free mar- these regions for the fi rst time, these countries kets, as well as their own national histories, are also experiencing for the fi rst time capital- resulted in varied attitudes. ist recessions, for which their populations are In Turkey, being ultra-wealthy was not not mentally prepared. Under communism, the considered as compatible with being honest economic hardship seemed constant, but it was for a long time—especially during the 1950s even and predictable. Over the years, people to the 1980s, until Turgut Özal became learned how to handle it and even make do. Turkish prime minister and then president But capitalist recessions are unexpected and in the 1980s and early 1990s. Özal moved have come as a rude shock. Turkey toward a free-market system, which enlivened the moribund economy and cre- he recession in 2009 was ated boom years for private enterprises. Only the fi rst capitalist crisis the after that did Turkey start to discuss entre- Bulgarians have seen, says preneurship, accumulation of wealth, growth Mateev. “Before it, people and the private sector as positive terms, says T thought our growth after Burcak Guven, editor of Forbes Turkey. entering the European Union in 2007 was Russia, with 95 billionaires, now trails inevitable until we caught up with the oth- only the United States and China, but ers. There is the social discontent due to Russian people do not have an easy time the rise of unemployment. Rich people are adjusting to the new wealth. That’s partly hiding from the public more than ever.” CENTRAL & EASTERN EUROPE EUROPE & EASTERN CENTRAL because Russia had more communist baggage For instance, even though Forbes Bulgaria than other countries. Maxim Kashulinsky, publishes a list of the most infl uential former editor of Forbes Russia, notes, “In Bulgarians, including the country’s wealth- other parts of Eastern Europe, when the iest citizens, Mateev has been unable to OPENNESS& SOCIAL ATTITUDES: free market was restored in the beginning meet the three richest men in the country of the ‘90s, there was a part of the popula- despite many attempts to interview them. tion who still remembered that their fathers Overall, transparency is on the rise in or grandfathers had owned businesses.” Central and Eastern Europe, with countries Not in Russia, where private ownership of like Poland and the Czech Republic lead- “means of production” was non-existent for ing the way. As a result, UHNWIs in these 70 years. “Some people fi nd it hard to accept countries are more forthcoming and assets the idea that somebody can own a factory, a are easier to analyze, and their countrymen bank or even a single store. Also, the massive are beginning to take pride in them.

8 | EMERGING MARKETS OPENNESS & SOCIAL ATTITUDES: AFRICA scores would be signifi be would scores African total itthe without and transparency, of terms in especially continent, onthe scores highest the of some received Africa South that noting worth Itis history. economic and political continent’s the and fortunes the of origins the with correlates which tunes, for- about openness for low scores relatively million. $400 of worth anet was list richest 40 Africa 2012 the to admission of price The 12%. of increase an billion, $72.9 worth were Africans 40 top the 2012 In people. richest Taiwan’s 40 than less but richest 40 Thailand’s than more lion, bil- $64.9 worth were Africans richest 40 2011, In the Africans. richest 40 the of list a publishing started has Forbes that tunes for- up-and-coming many so also are there But people. richest 1,226 the of list aires billion- world Forbes 2012 onthe Africans 16 only are there stage, this At tunes. ago.” years 20 India and ago years 30 was China like much I The Forbes Wealth Panel gave Africa Africa gave Panel Wealth Forbes The for- in growth spurs growth Economic brink of an economic take-off economic an of brink “on be the could World Bank, the to according and, Asia next the as to now referred is Africa tinent,” con- “hopeless a labeled past n the cantly lower. cantly , prising people, and success and isnor- people, prising mally acceptable and accepted.” accepted.” and acceptable mally “ Ugandans generally are enter- are generally “ Ugandans — SUDHIR RUPARELIA

RUPARELIA

FORBES INSIGHTS FORBES | 9 RANKEDRANKED ONON AA 0-100-10 SCALESCALE Openness About Wealth AFRICA In Africa: 3.8

Attitudes Toward Wealth Creators In Africa: 4.1

SOURCE: FORBES INSIGHTS WEALTH PANEL

ome of the African fortunes, and then opened them up for business. especially in industries like Africa’s richest man, and the world’s mining and natural resources, richest black man, Nigerian Aliko Dangote— were created during colo- whose net worth is $12 billion, according nial times and apartheid. to Forbes—also can trace his business roots That’sS not to say that even before the coun- back to pre-independence days. His father, tries gained independence there was no black Mohammed Dangote, was a successful busi- entrepreneurship. In an article in Forbes Africa, nessman and an associate of his maternal South Africa’s fi rst black billionaire, mining grandfather, Alhaji Sanusi Dantata, accord- magnate Patrice Motsepe, points to his father, ing to Forbes South Africa. Dantata and his Augustine, who was in a general dealership brother controlled the trade in kola nuts and OPENNESS& SOCIAL ATTITUDES: business, as an inspiration. Trained as a lawyer, livestock conducted by some 200 agents. Motsepe reached higher than his father ever Billionaire Dangote must have inherited could by getting involved in business early on their business genes: he started quite early in the 1990s, when things were opening up. He himself. At the tender age of eight he used bought some marginal mines that were near the to give packets of sweets he had made to the end of their lives, struck deals with the unions house servants to sell for him.

10 | EMERGING MARKETS 2013 AFRICA

The perception of the links between Forbes. He is well aware of the large dispari- business and government in Africa also ties between rich and poor on one hand and shapes attitudes toward the wealthy. Sudhir the fast-growing middle class on the other Ruparelia, who runs one of Uganda’s largest hand. “A successful [business] strategy means privately owned conglomerates, the epony- embracing all sectors of the population rather mous Ruparelia Group, has a net worth of than targeting the affl uent only. I believe $900 million, making him the 18th-rich- wealth creators who selectively target this est African, according to Forbes. Ruparelia segment only may get a mixed reception,” he believes that social attitudes toward the told Forbes Insights. wealthy are split. “There would defi nitely be some well wishers and some resentments,” he aad is best known for his suc- says. “Ugandans generally are very enterpris- cess in securing voluntary ing people and success is normally acceptable licenses from global giants like and accepted.” It’s worth noting that—rem- Glaxo SmithKline to produce iniscent of the example of Poland—he ties antiretrovirals to fi ght HIV/ acceptance by the population to the level of AIDSS and for securing U.S. Food & Drug entrepreneurship. Administration approval as an antiretroviral Ruparelia also recognizes the level of producer under President George W. Bush’s responsibility that comes with money and Emergency Plan for AIDS Relief. The costs keeps a down-to-earth attitude. “One are less than 5% of the pricing in the U.S., becomes a role model, and this has its own making these lifesaving medications accessible social responsibilities,” he says. for many people in need. There is no escaping economic disparities Sums up Saad: “In our continent, a bal- OPENNESS& SOCIAL ATTITUDES: in Africa. With a net worth of $975 million, ance between commercial success and an Stephen Saad, the cofounder of Aspen Group, investment back into society is important in was Africa’s 17th-richest person, according to shaping a positive attitude in society.”

Attitudes Toward Wealth Creators In the Middle East: 4.6

SOURCE: FORBES INSIGHTS WEALTH PANEL THE MIDDLE EAST MIDDLE THE

n the Middle East the openness of very liquid. Post 9/11, many Middle Eastern the wealthy about their fortunes is a investors pulled their funds from U.S. and relatively low 3.3, while social atti- European markets and invested the money tudes toward the wealthy are more in the region, creating further distance and than a point higher, at 4.6. This insularity from broader global markets.” transparencyI score does not include Israel, In the Middle East business dealings which is otherwise counted in other scores. and the management of fortunes are often Thanks to its robust democracy and stock tied to social and cultural issues, such as market, the transparency scores awarded reliance on and trust of family members. Israel by Forbes wealth analysts are so high, This reliance on and trust of family was that had these been included in the regional confi rmed by the 2012 Forbes Insights score, the Middle East transparency score study sponsored by Societe Generale would have risen to 5.6. Private Banking, “Global Wealth and OPENNESS& SOCIAL ATTITUDES: Tatiana Serafi n, a wealth consultant who Family Ties,” which established that the has covered the Middle East for Forbes, Middle East is among the regions with the notes, “There is little need for transparency highest percentage of businesses run by [in the Middle East], as many deals are done families (at 62%, just behind India, where via insular networks. Public markets are not 73% of the largest fortunes are family run).

12 | EMERGING MARKETS EMERGING MARKETS2013 he relatively high scores for be a billionaire in the Middle East in reli-

THE MIDDLE EAST MIDDLE THE social acceptance in the Middle gious terms, adding another, deeper layer to East may be confounding con- the understanding of attitudes toward wealth sidering the recent Arab Spring, in the region: “Wealth creation in the Islamic which was, to a large extent, world is very important because Islam, really, causedT by the anger of the have-nots and the is a blend of capitalism and socialism. For lack of economic opportunities for the young. example, there’s a verse in the Qur’an that An article in Zawya, a business intelligence and says, ‘If you thank God, God shall give you news provider based in Dubai, UAE, analyz- more.’ That’s pure capitalism, obviously. It ing the Forbes billionaires list, pointed to the says you can earn more. Yet, on the other relative handful of the very rich in the region— hand, Islam has a compulsory tax.…[If you for example, as compared with Russia and don’t pay this tax in the Islamic world], that’s China—and cited overall wealth inequality as more than a crime. It’s against faith. I take one of the reasons for the Arab Spring in several this issue of wealth creation and paying our Middle Eastern countries, whose governments Islamic zakat very religiously. It’s really very do not foster entrepreneurship. much part of Islam. It says, ‘You can cre- When interviewed by Forbes.com, ate as much wealth as you want, but be sure Prince Alwaleed bin Talal—with a net that you abide by the rules and regulations OPENNESS& SOCIAL ATTITUDES: worth of $18 billion, the richest man in of Islam that says you have to pay that every Saudi Arabia—defined what it means to year for the needy, the poor, etcetera.’”

1KETS3 COPYRIGHT © 2013 FORBES INSIGHTS | 13 n her book Plutocrats, Chrystia of the Russian entrepreneurs have been held Freeland writes that the world’s back by their continued identifi cation with super-elite “are becoming a trans being Russian—in other words, some of global community of peers who them may have too little in common with Ihave more in common with one the trans global community described by another than with their countrymen back Freeland. “They need to realize that their home.” She adds that this new super-elite wealth makes them part of a global econ- consists, to a notable degree, of fi rst- and sec- omy,” says Brown. “Some of the most ond-generation wealth. successful billionaires have realized that, CITIZENS “We have defi nitely more in common while Russia may have given them their than not,” Poland’s Kulczyk says, “irrespective wealth, they can use the wealth as a spring- of the object of our activity, business strategies board to experience what lies beyond their or latitude. There is no doubt that very active homeland.” businessmen work not because they have to The billionaire entrepreneurs Forbes but rather because they want to.” Insights spoke with for this report drew In the emerging markets analyzed for distinctions between the business mindsets this report, the biggest fortunes are indeed specifi c to their countries or regions versus mostly fi rst-generation. This group is led by how they think when operating globally.

GLOBAL GLOBAL Russia, where 100% of the biggest fortunes “I am a Polish businessman who carries have been made by their current owners, in out investments globally. I think globally the aftermath of the fall of communism (see and act globally,” says Kulczyk. “Poland chart). has always been and will be important to But while Russians have the highest me, but today investing requires not only percentage of self-made billionaires, Heidi portfolio diversifi cation but geographical Brown, a Russia expert, believes that some diversifi cation as well.”

here are defi nitely national or regional characteristics in doing business. South Africa’s Saad sees the African business mindset as being “less prescriptiveT and built more on reaching consensus. Legal challenges tend to be resorted to only once all other avenues are exhausted. First-generation fortunes from emerging markets In trying to reach consensus, it can be frus- trating and construed as procrastinating and indecisive. However, it is generally a positive EMERGING MARKETS IN CENTRAL AND EASTERN and respectful environment.” EUROPE, MIDDLE EAST AND AFRICA “There is defi nitely an African mindset/ business culture,” says Uganda’s Ruparelia. Total For All Three Regions “People need African exposure to succeed 78% in Africa.” Russia Nigeria’s Dangote believes that Nigerians 100% have a penchant for risk taking, which makes Central and Eastern Europe them natural born entrepreneurs. He told 84% Forbes Africa that “…a Nigerian, by nature, does not work for anybody. A Nigerian Africa 74% will always try to do his best and work for himself.” Middle East Kulczyk describes the Polish busi- 54% ness mindset in the following way: “In my opinion, entrepreneurship and willingness to

14 | EMERGING MARKETS EMERGING MARKETS work hard are the qualities that distinguish Polish people. We are one of the hardest- working 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 fi ght crises runs in our blood.” CITIZENS 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.”

GLOBAL GLOBAL 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 phar- maceuticals is global,” he says, “and local players tend to be almost exclusively local. So there is more commonality when discussing “We need to understand that global issues with global peers.” competition for resources and clients is not with ut his inspiration comes from South Africa. “I have competitors from across been blessed to have so the street or from another many role models within city, but with millions South Africa who have achievedB greatness despite huge socio- of businesses around the world.” economic challenges. Their leadership, — VICTOR PINCHUK, FOUNDER, determination and example, although not EASTONE, UKRAINE industry specifi c, 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 So while Freeland may be right that in to the United Kingdom with his parents terms of business the world’s billionaires at age 16 after President Idi Amin expelled speak a common language, they often see all Asians from the East African country in their participation in global business as a way 1972, but he came back in 1985. “I think of to circle back to their homelands and com- myself as a Ugandan Asian,” he stresses. munities, with which they strongly identify.

MARKETS COPYRIGHT © 2013 FORBES INSIGHTS | 15 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,” saysE 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.

COMPANY 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 offi ces 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. “Coming from an How many billionaires from emerging markets emerging market is own companies that operate internationally? 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, slow Internet con- Total For All Three Regions nections, inadequate 71% infrastructure and the Central and Eastern Europe speed at which the 74% government moves in its service delivery as Africa 72% challenges. But Kulczyk Middle East points to the advan- 61% BUILDING A GLOBAL tages of coming from Central Europe: “This experience is invaluable. In Central and Eastern Europe, we have created a very effi cient 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 fl exible in react- ing 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 defi - nitely 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

16 | EMERGING MARKETS EMERGING2013 MARKETS 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

COMPANY 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 chal- incentives, fi nancing opportunities for entre- lenges they face, a majority of them can be preneurs (such as angel investors and venture classifi ed as international, meaning that they capitalists), as well as an education system operate outside their own and adjacent coun- fostering critical thinking, inquisitive minds tries (chart, page 16). and creativity. Developing all of the above Joining the ranks of the world’s rich- takes time and experience. est people on a local or regional basis seems The Global Innovation Index, published easier than creating or co-owning a top by INSEAD and the World Intellectual

BUILDING A GLOBAL global company. Individual billionaires Property Organization (WIPO, a special- from the emerging markets studied for this ized agency of the United Nations), does report account for 14% of the world’s billion- not list any of the countries studied for this aires, but these individuals own or co-own report among the top 10 innovative coun- just 6% of the world’s 2,000 largest public tries. The highest position, number 17 on corporations. the list, is achieved by Israel. Also in the top No wonder then that global reach is a holy 30 are Estonia (19), Slovenia (26), the Czech grail, gaining respect and admiration. The Republic (27) and Latvia (30). proof of just how diffi cult it is to create a global Maxim Kashulinsky, former editor of brand is the Forbes list of the 100 most valuable Forbes Russia, believes that the lack of global brands. Topped by Apple, a brand estimated experience is a shortcoming of Russian busi- by Forbes to be worth $87 billion, and ending ness. He points out that there are hardly any with Kleenex, which clocks in at $3 billion, the Russian brands or companies with inter- list includes no brands from any of the emerg- national scale. Russian Standard vodka and ing markets analyzed for this report. Beeline, he says, are rare examples of Russian Creating a new brand, technology or brands that are known globally. (Beeline is design depends on the level of innova- one of the brands of OJSC VimpelCom, one tion in a given country or region, which in of the world’s largest integrated telecommu- turn requires openness of the economy, pay nications 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 in several other countries, including the 209 million subscribers.) Prince Mohammad Bin Abdulaziz airport in Ukraine’s Pinchuk stresses the importance Saudi Arabia, as well as the Riga and Tbilisi of a global business mindset: “We need to international airports. Turks are also proud understand that competition for resources and of Vestel Group, a maker of home appliances, clients is not with competitors from across the whose television sets are sold all over Europe. street or from another city, but with millions of businesses around the world. Global think- n Africa, Nigeria’s Dangote is ing in developing innovative approaches and admired for international expansion. effi cient business processes is crucial.” His Dangote Group—a cement, Uganda’s Ruparelia puts international sugar-refi ning, fl our-milling and expansion in perspective when he says: “I salt-processing conglomerate—has personally think there is enough to do in the biggest cement plant in the Southern

BUILDING A GLOBAL I Africa. So it’s best to concentrate in Africa, Hemisphere, with operations in 14 African but with a global outlook and awareness.” countries and plans to open cement plants in Forbes Turkey’s Guven also points to the Myanmar and Iraq. “He is well on the way achievements of billionaires whose compa- to realizing his dream of an African multi- nies have fl ourished beyond Turkish borders. national,” says Chris Bishop, editor of Forbes Among them is Turkcell, founded by Africa. Dangote is planning to list the com- Mehmet Emin Karamehmet, a mobile phone pany on the London stock exchange this year operator and the fi rst Turkish company and gain further international exposure. listed on the New York Stock Exchange. In the Czech Republic, Forbes Czech Another international Turkish company is editor Petr Simunek also sees global oper- Tav, founded by Sani Sener. Tav operates the ations as an achievement. He quotes the Ataturk airport in Istanbul, as well as airports example of Petr Kellner, who with a net

EMERGING18 | EMERGINGGLOBAL MARKETSWEALTH MARKETS AND FAMILY TIES COMPANY worth of $8.2 billion is the Czech Republic’s the Tel Aviv stock exchange. Other innova- richest man. Kellner continues to expand his tive entrepreneurs, according to Bin-Nun, insurance and banking empire. His company, include Gil Shwed (net worth $1.9 bil- Home Credit, a lender, is expanding business lion), founder of Check Point Software in China while also launching new projects Technologies, the world’s leader in Internet in India and Indonesia. Kellner also has big security products, and SanDisk cofounder Eli retail plans in Russia, where he purchased Harari, an Israeli engineer whose inventions the remaining 50% stake in electronics allow the use of fl ash memory in smart- retailer Eldorado. phones and digital cameras. Simunek also points to two other successful Czech brands that have made it ust like in mature markets, internationally. They are computer antivi- technology is seen as the indus- rus companies AVG Technologies (listed on try that will vault emerging the New York Stock Exchange) and AVAST, markets ahead, transforming which are among the world’s biggest compa- them into high-value-added nies in their fi eld. producersJ who do not need to rely on inexpensive labor or natural resources for n Israel as well, Boaz Bin-Nun, growth. So far, perhaps the most visible former editor of Forbes Israel, claim to glory from the emerging mar- credits “those who were innova- kets in terms of famous technology brands tive, consistent and [have stuck to is Skype. Even though the service was a] relatively narrow line of busi- founded by Swedish and Danish business-

BUILDING A GLOBAL ness,I such as high tech.” Boaz Bin-Nun men, it is the Estonians who developed the points to the importance of a focused busi- actual technology. (No wonder then that ness and building a company organically for Estonia is ranked a high 19 on INSEAD and a long time based on innovation, as opposed WIPO’s Global Innovation Index.) to buying up many companies with lots of Pinchuk also wants his country, debt (and often attempting to restructure that Ukraine, to participate in the global tech- debt). nology boom. He created the Internet Among the Israeli brands and companies business incubator EastLabs to leverage bin Nun defi nes as innovative is Mellanox the country’s great engineering tradition. Technologies, a leading supplier of inter- “Using, as in other areas of our business, connect solutions for servers and storage innovation as a principle, we are, I hope, systems, which is listed on both Nasdaq and creating a center of energy for the future economy of Ukraine,” he says.

he level of wealth dis- political system, the status came from educa- play, as well as its forms, tion and elevated, often academic, titles. varies by region and individ- The relative restraint of Central ually. Overall, the wealthy Europeans may be a vestige of associating in mature markets (North social status with non-material aspects. It AmericaT and Western Europe) like to display is merely relative though, as ultra-wealthy their riches slightly more than their counter- Central Europeans also favor expensive cars, parts in emerging markets analyzed for this and show their houses or private planes in report. In terms of wealth display, the Forbes magazines. Wealth Panel awarded mature markets 6, and In some countries, adds Serafi n, the dis- DISPLAY OFDISPLAY emerging markets 5.3, on a scale from 0 to cretion is based on safety concerns, to the 10, with 0 being very discreet about wealth point of “hiding.” For example, the Czech and 10 being total display. Republic’s Petr Kellner closely guards any There are, however, vast regional diff er- photos of himself and never allows any of his ences among emerging markets. The Forbes family to be taken. Wealth Panel ranked the wealthy in Africa On top of that, the current economic and Central Europe as the most under- recessions have strengthened the reluctance stated, awarding them the rank of 4.5 and of the wealthy to show off their wealth. Says 4.6 respectively. Russia received a 7, and the Forbes Bulgaria’s Mateev: “Some of them Middle East proved to be the most open in its used to display their wealth, but after the cri- wealth display, at 8 (see table, page 21). sis started, in Bulgaria at the end of 2008, How do the international editors of they realized how annoying this is to the Forbes explain the reasons for these diff er- people, and now they are more discreet about ences in approaches to the display of wealth? their wealth.” In Central Europe there is a culture of Not all displays of wealth seem to be relative discretion, which Serafi n says may viewed negatively. While cars and mansions still be a remnant of socialism, and on the may be perceived as gaudy, art collections, surface at least, the face of egalitarianism. especially of national treasures, are per- Under communism, social status was usually ceived as enriching the culture. Perhaps their signaled not by income but by perks associ- countrymen view the wealthy as curators of ated with high-ranking membership in the national heritage, who win renown and rec- Communist Party. For those outside the ognition for the country’s achievements.

20 | EMERGING MARKETS RANKED ON A 0-10 SCALE Display of Wealth

Mature Markets (United States and

WEALTH Western Europe): 6

Emerging Markets of Europe, Middle East and Africa: 5.3

Middle East: 8

Russia: 7

Central Europe (without Russia): 4.6 DISPLAY OFDISPLAY

Africa: 4.5

SOURCE: FORBES INSIGHTS WEALTH PANEL

But the idea of ownership of art is a for improving society. The more you own, new concept, as under communism art was the more you can do for your country. For thought of as belonging to all people (gov- example, I am proud that each day around ernment) and displayed in museums. For an 2,000 mostly young Ukrainians come to see individual to own part of that national trea- for free top exhibitions of contemporary art, sure was deemed impossible, just the way an including works from my art collection in individual cannot own a part of history. the Pinchuk Art Centre in Kiev.” In Bulgaria, Vassil Bozhkov, who con- Equally important, Pinchuk’s founda- trols Nove Holding, an insurance and tion not only propagates national art, but also gambling conglomerate, established the directly introduces Western achievements by Thrace Foundation in 2004, introducing the bringing to Ukraine singers like Elton John concept of private art ownership. “By creat- and Paul McCartney, as well as visionaries ing Vassil Bozhkov Museum we succeeded like Bill Clinton and Shimon Peres, to share in changing the traditional opinion that the their inspiration with Ukrainian citizens. museum work belongs only to the govern- Russia’s billionaires, however, have ment,” says the mission statement on the become known as keen consumers of lux- foundation’s website. ury brands, which are actively courting Ukraine’s Pinchuk also sees his wealth as this top clientele. Back in 2006, the famous a means to foster national culture. Says he: Millionaires Fair in Moscow included the “I do not hide my wealth, but I do not show world’s most expensive phone—a diamond- it off , and most importantly I try to use it encrusted model by the Swiss company

Goldvish for €1.4 million—and the most Russia’s billionaire barons onto the world expensive car in the world, the Bugatti stage. According to Reuters, Potanin said, Veyron, also priced at €1.4 million. The “The new cool for real oligarchs is a much French cosmetics company Guerlain specially more modest mingling among the population made perfume for the fair: one bottle priced at large.…It is not good to demonstrate your at €35,000, according to the press accounts. luxury and your wealth: to rub it in the faces of others is insulting.” aybe the spending spree Interestingly, according to the same is the reaction to the lon- Reuters article, “Potanin’s privileged upbring- gest and most ideological ing as the son of a high-ranking Soviet trade period of communism in offi cial and an education at Moscow’s elite DISPLAY OFDISPLAY Eastern Europe, or the diplomatic academy have always set him apart notionM that as inhabitants of an empire, they from some of the more showy tycoons.” Thus, are expected to live on a grander scale. Some just like in the rest of Central Europe, status is believe that the volatility of Russian history not limited to material goods only, but is also has made Russians live for the day, and spend aff orded by education, which in turn also to freely. A deeper historical interpretation may be some degree shapes spending patterns and the that sitting on the outskirts of Western Europe, display of wealth. the empire felt the need to compete with Western achievement on a grand, Eastern scale. n Russia’s southern neighbor, But the Russians may have already reached Turkey, there are three types of their climax in spending. Kashulinsky points ultra-rich individuals when it comes out that the wealth display in Russia is less vis- to displaying wealth, says Forbes ible nowadays and attributes this change to the Turkey’s Guven. The fi rst group emergence of more very rich offi cials and top are Ithe “old rich,” which means the time managers of state-controlled companies, who of their accumulation of wealth is relatively tend to be very discreet. The private sector “old,” like in the ‘70s, ‘80s and ‘90s. Their simply follows the trend. Also, the billionaires companies are nowadays usually run by the are becoming older and more conservative, second or third generation. They typically do notes Kashulinsky. not like to display their wealth. Furthermore, Last year, it was a Russian oligarch, as they are some of the best-known busi- Vladimir Potanin, whose net worth Forbes ness names in Turkey, they are careful about estimates at $14.5 billion, who spoke to wealth display due to security reasons, Reuters and expressed his disapproval of the because they have always been targets of ostentation that accompanied the arrival of kidnapping and blackmail.

22 | GLOBALEMERGING WEALTH MARKETS AND FAMILY TIES WEALTH

The second group are the ultra wealthy ga Motylska, sub editor of Forbes who have acquired most of their wealth Africa, sums up: “While the rich after 2004. They are usually from a Muslim do live the good life and in the lap conservative background. Some are from rel- of luxury, I would say that they are atively less developed, rural parts of Turkey, rather discreet and humble. Also not a big metropolis such as Ankara, Istanbul perhaps,I they are aware that were they to or Izmir, according to Guven. One of the excessively fl aunt their wealth, they would reasons they do not like to show off their make themselves an easier target of crime.” wealth is their conservative Islamic back- They are prudent to be discreet. Last year kid- ground. There is a well-known saying: “you nappers snatched the 84-year-old mother of should never be able to tell who has money Tony Elumelu, a Nigerian multimillionaire and who is a true believer.” We can under- banker. She was rescued four days later and DISPLAY OFDISPLAY stand from this that faith and wealth should arrests were made, according to Forbes Africa. not be fl aunted. Forbes contributor Mfonobong Nsehe writes on Forbes.com that “when it comes to he third group are the recent billionaires splurging on toys, Africa’s richest entrepreneurs, many of them are not as ostentatious as their foreign coun- young, who are not coming terparts. Africa’s richest folks are a bit more from a conservative back- modest.” ground but are on good terms The Middle East comes in with the withT the government, and show that they highest score for wealth display. Interestingly, respect the Islamic way of life. They enjoy while the Arab countries and Israel diff er displaying their lifestyle, talking about their in other categories, they are all consistently accomplishments and next projects. They high in terms of wealth display. like to show off both their money and their The Middle East is known for wealth dis- capacity to make money. play at every level: individual, country-based South Africa’s Saad takes a philosophical and global. approach when he says he is not comfortable In terms of country-based display, the displaying wealth. “We have very humble United Arab Emirates boasts the world’s tallest beginnings at Aspen. We also realize how building, the exquisite Burj Khalifa, and a cou- close the line between success and failure ple of man-made islands, including one shaped really is. The reality of life is that you come like a palm tree. Globally too, Middle Easterners into the world with nothing and you will are snatching the most luxurious brands, such as leave it with nothing. A safe never follows a British luxury retailer Harrods, now owned by coffi n. A display of contribution to society is Qatar Holding, which bought it from Egyptian both more fulfi lling and rewarding.” Mohamed Al Fayed several years ago.

COPYRIGHT © 2013 FORBES INSIGHTS | 23 n mature markets, there is a destination for the rich. Internationally, culture of family offi ces, in par- investments in Russia, the Balkans and the ticular for multigenerational Middle East are also popular. family fortunes, which help In the Middle East, the wealthy tend ultra-wealthy families with their to invest in tangible ventures such as moneyI management. Traditionally, the property, partnerships, commercial ven- interest in family offi ces and private bank- tures or trading, but nothing that pays ing spikes with intergenerational wealth interest, of course, says Refaat Jaafar, transfers. This stage is only beginning in former editor of Forbes Arabia and busi- many emerging markets, where most bil- ness presenter at Sky News Arabia. lionaires are still fi rst generation. Internationally, he adds, the most popular The necessity for such legal and fi nan- markets are developing countries. Also, cial vehicles became painfully apparent some of the wealthy invest in properties several years ago when a Polish multimil- such as hotels in the United States and lionaire died suddenly, and his fortune Europe. passed on to his son from his fi rst mar- In Central and Eastern European riage, which led to a lawsuit by the countries, personal investing by the deceased millionaire’s current partner. wealthy is tied to the level of the devel- The case was publicized by the media, opment of their economies and the and drew the attention of other ultra perceived safety of their assets. Forbes wealthy to the need for organized wealth Poland’s Pochlopien says that most ultra planning and management. wealthy invest within the country, except Often billionaires from emerg- for international vehicles managing their

INVESTMENTS ANDINVESTMENTS PURSUITS ing markets work with private bankers private money, for which the most attrac- from mature markets, who have a leg up tive foreign investments are real estate in in terms of experience in dealing with Europe and all over the world. private clients. While family offi ces in emerging markets such as Central Europe n Bulgaria, the most visible do exist, they are not yet a common prac- investments of the ultra wealthy tice. Sometimes they are set up off shore. are sports teams and media. Not Turkey may be among the most devel- many look at the Bulgarian stock oped among emerging markets in terms market, but some of them invest of family offi ces. In fact, Forbes Turkey’s in theI stock market abroad, says Forbes Guven says many major families use fam- Bulgaria’s Mateev. ily offi ces. She adds that real estate and In Russia, according to Kashulinsky, stock market investments are the most the wealthy favor real estate and bank SPENDING: SPENDING: popular forms of investment in Turkey, deposits. Some of them invest in and that Turkey—as well as the regional Internet companies, and there are art Turkic Republics—is the main investment lovers, of course.

24 | EMERGING MARKETS Notable Investments and Pursuits

Sports: 39 Philanthropy: 35 Politics: 27 Arts: 23 Real estate: 14

SOURCE: FORBES INSIGHTS RESEARCH OF 250 UHNWIS

n Africa, Forbes.com contrib- and pursuits among billionaires from emerg- utor Nsehe says that among ing markets. According to Forbes, Russian ultra-wealthy Nigerians real estate billionaire Mikhail Prokhorov (the 58th- is the preferred asset class. The richest man in the world, with a net worth of wealthy invest their money both $13.2 billion, according to Forbes), owns the

INVESTMENTS ANDINVESTMENTS PURSUITS withinI the country and internationally, with Brooklyn Nets, an American basketball team. the wealthiest Nigerians showing a prefer- Another Russian, Roman Abramovich (the ence for London and South Africa. South 68th-richest man, with a net worth of $12.1 Africa’s Saad says that he invests in the stock billion) owns UK’s Chelsea soccer team, market, with his largest asset being his shares and South Africa’s mining magnate Patrice in Aspen, as is often the case with billionaires Motsepe (net worth $2.65 billion) controls running public companies. a South African football club, Mamelodi Ukraine’s Pinchuk believes that con- Sundowns, which plays in the South African temporary art is a great investment, because Premier Soccer league. it is an enormously profi table investment in Do billionaires buy sports teams to make Ukrainian society. “What better investment money, or to gain the instant international could you imagine than one where the ROI is visibility that a well-known team aff ords, or thousands of young Ukrainians every day who purely for their passion for sport? SPENDING: SPENDING: stand in line in front of our museum?” he asks. “There is always a certain level of van- Pinchuk draws attention to the fact that ity to buying a sports team,” says Kurt sometimes, however personal wealth is spent Badenhausen, a Forbes senior editor and or invested—whether on art, a sports team expert on international sports team valua- or philanthropy—it’s hard to classify such tions. “You do not do it if you want to stay spending as a pure money-making invest- under the radar. That said, there are wildly ment, pursuit of one’s passion or a desire to divergent reasons for buying a team. Some benefi t society. do it to make money, many do it for ego Sports are among the top investments and to rub shoulders with jocks, some do it

COPYRIGHT © 2013 FORBES INSIGHTS | 25 for programming for their media interests. the charitable foundations of wealthy families “For super wealthy guys, owning a are often handled by their family offi ces, who sports team is the ultimate toy, but they advise families on intergenerational wealth vary tremendously on how closely they transfer. They may advise on choices such as watch the bottom line. Making money in whether to involve descendants in existing sports is usually about asset appreciation and charities, or they may off er to fund charities not the yearly cash fl ow,” he adds. chosen by descendants. Politics has also been the pursuit of the ultra wealthy in emerging markets, just as it ringing the circle of sports has been in mature markets. Money helps, and philanthropy together, but it is by no means a guarantee of win- South Africa’s Saad manages ning an election, as shown by the example to combine his passion for of American multimillionaire Mitt Romney, sports and charity into one the Republican presidential candidate who endeavor.B In April he raised $1.1 million for lost in 2012 to Barack Obama. Some of the pediatric healthcare for the children of Africa rich, such as Russia’s Mikhail Khodorkovsky in the Aspen Trans Karoo cycle challenge by and Ukraine’s Yulia Tymoshenko, paid a cycling 240 kilometers off -road in 16 hours high price for their forays from business into through rugged terrain. politics. Both are currently jailed. Other Ukraine’s Pinchuk founded an NGO, billionaires continue to engage in politics. Yalta European Strategy. Every year in Yalta Naguib Sawiris, Egyptian telecommunica- global decision makers discuss the challenges

INVESTMENTS ANDINVESTMENTS PURSUITS tions billionaire, founded the Free Egyptians of tomorrow and Ukraine’s place in Europe. Party in the aftermath of Egypt’s revolution. Among others, Tony Blair, Bill Clinton, Philanthropy is also at the beginning Shimon Peres and Richard Branson have stages in the emerging markets. While phi- spoken there with Ukrainian leaders and lanthropy in itself is a charitable and not a students. Pinchuk says that the goal of his money-making endeavor, it is interrelated philanthropy is to empower the next genera- with wealth management. In mature markets tion to change their country and the world. SPENDING: SPENDING:

26 | EMERGING MARKETS he information in this study is based on an exclusive analysis of 250 ultra high net worth individuals in 22 T 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 METHODOLOGY 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 Seraﬁ n, international wealth analyst Petr Simunek, editor in chief, Forbes Czech Paul Trustfull, editor in chief, Forbes Afrique Viktor Vresnik, editor in chief, Forbes Croatia

250 UHNWIs APPENDIX NOTE: Some percentages may not add to 100% due to rounding.

■ AGE OF BUSINESS INHERITED AND GROWING: Individuals FIRST GENERATION: 78% who inherited their fortune and contin- SECOND GENERATION: 17% ued to increase their fortune. They could THIRD GENERATION: 3% be making money through their inherited (1% NA) company or a diff erent one.

■ GEOGRAPHICAL REACH INHERITED: 4% LOCAL: only operating in the home INHERITED AND GROWING: 16% country SELF-MADE: 77% REGIONAL: operating in neighboring (3% NA) countries INTERNATIONAL: global operations ■ AVERAGE SIZE OF FORTUNE $2,785 million INTERNATIONAL: 0.5% LOCAL: 15% ■ INDUSTRY (TOP FIVE) LOCAL, REGIONAL: 9% DIVERSIFIED: 32 LOCAL, INTERNATIONAL: 5% BANKING: 18 LOCAL, REGIONAL, INTERNATIONAL: 71% OIL: 13 INVESTMENTS: 13 ■ AVERAGE AGE 57 REAL ESTATE: 11

■ GENDER ■ FAMILY INVOLVEMENT MALE: 98% NONE: 64% FEMALE: 2% SOME FAMILY INVOLVEMENT: 36%

■ SELF-MADE, INHERITED, OR ■ NOTABLE INVESTMENTS AND INHERITED AND GROWING PURSUITS SELF-MADE: Individuals who made their SPORTS: 39 fortunes themselves. PHILANTHROPY: 35 INHERITED: Individuals who inherited POLITICS: 27 their fortune. ARTS: 23 REAL ESTATE: 14

28 | EMERGING MARKETS 154 UHNWIs

■ COUNTRIES INHERITED: Individuals who inherited Czech Republic, Georgia, Kazakhstan, their fortune. Poland, Romania, Russia, Turkey, Ukraine INHERITED AND GROWING: Individuals who inherited their fortune and contin- ■ AGE OF BUSINESS ued to increase their fortune. They could FIRST GENERATION: 84% be making money through their inherited SECOND GENERATION: 10% company or a diff erent one. THIRD GENERATION: 6% SELF-MADE: 97% ■ GEOGRAPHICAL REACH INHERITED AND GROWING: 1% LOCAL: only operating in the home (2% NA) country REGIONAL: operating in neighboring ■ AVERAGE SIZE OF FORTUNE countries $3,058 million INTERNATIONAL: global operations ■ INDUSTRY (TOP FIVE) LOCAL: 17% DIVERSIFIED: 16 LOCAL, REGIONAL: 5% INVESTMENTS: 8 LOCAL, INTERNATIONAL: 2% BANKING: 8 LOCAL, REGIONAL, INTERNATIONAL: 74% OIL: 8 (2% NA) CONSTRUCTION: 4

■ AVERAGE AGE 54 ■ FAMILY INVOLVEMENT NONE: 72% ■ GENDER SOME FAMILY INVOLVEMENT: 28% MALE: 99% FEMALE: 1% ■ NOTABLE INVESTMENTS AND PURSUITS CENTRAL& EASTERN EUROPE ■ SELF-MADE, INHERITED, OR SPORTS: 31 INHERITED AND GROWING POLITICS: 21 SELF-MADE: Individuals who made their ARTS: 14 fortunes themselves. PHILANTHROPY: 13 REAL ESTATE: 6

■ AGE OF BUSINESS INHERITED AND GROWING: Individuals FIRST GENERATION: 100% who inherited their fortune and continued to increase their fortune. They could ■ GEOGRAPHICAL REACH be making money through their inherited

RUSSIA LOCAL: only operating in the home company or a diff erent one. country REGIONAL: operating in neighboring SELF-MADE: 100% countries INTERNATIONAL: global operations ■ AVERAGE SIZE OF FORTUNE $4,600 million LOCAL: 20% LOCAL, REGIONAL: 6% ■ INDUSTRY (TOP FIVE) LOCAL, INTERNATIONAL: 3% STEEL: 5 LOCAL, REGIONAL, OIL: 5 INTERNATIONAL: 71% INVESTMENTS: 3 OIL, BANKING, TELECOM: 3 ■ AVERAGE AGE 50 BANKING, IT, REAL ESTATE: 2

■ GENDER MALE: 100% ■ FAMILY INVOLVEMENT NONE: 81% ■ SELF-MADE, INHERITED, OR SOME FAMILY INVOLVEMENT: 19% INHERITED AND GROWING SELF-MADE: Individuals who made their ■ NOTABLE INVESTMENTS AND fortunes themselves. PURSUITS INHERITED: Individuals who inherited SPORTS: 14 their fortune. POLITICS: 11 ARTS: 11 REAL ESTATE: 6

30 | EMERGING MARKETS 50 UHNWIs

■ COUNTRIES INHERITED: Individuals who inherited Angola, Egypt, Kenya, Morocco, Nigeria, their fortune. South Africa, Tanzania, Uganda, INHERITED AND GROWING: Individuals Zimbabwe who inherited their fortune and continued to increase their fortune. They could AFRICA ■ AGE OF BUSINESS be making money through their inherited FIRST GENERATION: 74% company or a diff erent one. SECOND GENERATION: 24% THIRD GENERATION: 2% SELF-MADE: 82% INHERITED: 4% ■ GEOGRAPHICAL REACH INHERITED AND GROWING: 14% LOCAL: only operating in the home country ■ AVERAGE SIZE OF FORTUNE REGIONAL: operating in neighboring $1,543 million countries INTERNATIONAL: global operations ■ INDUSTRY (TOP FIVE) REAL ESTATE: 7 INTERNATIONAL: 2% DIVERSIFIED: 6 LOCAL: 20% BANKING: 6 LOCAL, REGIONAL: 4% OIL: 5 LOCAL, INTERNATIONAL: 2% RETAIL: 4 LOCAL, REGIONAL, INTERNATIONAL: 72% ■ FAMILY INVOLVEMENT ■ AVERAGE AGE 61 NONE: 64% SOME FAMILY INVOLVEMENT: 36% ■ GENDER MALE: 96% ■ NOTABLE INVESTMENTS AND FEMALE: 4% PURSUITS PHILANTHROPY: 12 ■ SELF-MADE, INHERITED, OR SPORTS: 8 INHERITED AND GROWING REAL ESTATE: 6 SELF-MADE: Individuals who made their fortunes themselves.

■ COUNTRIES INHERITED AND GROWING: Individuals Israel, Kuwait, Lebanon, Saudi Arabia, UAE who inherited their fortune and continued to increase their fortune. They could ■ AGE OF BUSINESS be making money through their inherited FIRST GENERATION: 54% company or a diff erent one. SECOND GENERATION: 34% THIRD GENERATION: 7% SELF-MADE: 50% (4% NA) INHERITED: 9% INHERITED AND GROWING: 39% ■ GEOGRAPHICAL REACH (2% NA) LOCAL: only operating in the home MIDDLE EAST MIDDLE country ■ AVERAGE SIZE OF FORTUNE REGIONAL: operating in neighboring $3,249 million countries INTERNATIONAL: global operations ■ INDUSTRY (TOP FIVE) DIVERSIFIED: 10 INTERNATIONAL: 2% INVESTMENTS: 5 LOCAL, REGIONAL: 26% BANKING: 4 LOCAL, INTERNATIONAL: 7% SOFTWARE: 4 LOCAL, REGIONAL, INTERNATIONAL: REAL ESTATE: 4 61% (4% NA) ■ FAMILY INVOLVEMENT NONE: 37% ■ AVERAGE AGE 61 SOME FAMILY INVOLVEMENT: 63%

■ GENDER ■ NOTABLE INVESTMENTS MALE: 98% AND PURSUITS FEMALE: 2% PHILANTHROPY: 8 POLITICS: 6 ■ SELF-MADE, INHERITED, OR ARTS: 5 INHERITED AND GROWING YACHTS: 3 SELF-MADE: Individuals who made their REAL ESTATE: 2 fortunes themselves. INHERITED: Individuals who inherited their fortune.

32 | EMERGING MARKETS ABOUT FORBES INSIGHTS

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