It’s been another long, tough year for the members of Australia’s super rich club.
A year that started with Gina Rinehart becoming the richest woman in the world will end with commodity prices under pressure and the golden mining sector glow that has lit the Rich List for more than five years seemingly fading.
We’ll have to wait until next year until Forbes and BRW publish their official rich lists to see exactly how much the total wealth has fallen, but expect Rinehart to shed billions and the coal barons – Chris Wallin, Sam Chong and, of course, Clive Palmer – to be hit hard as well.
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The one saving grace has been the performance of the ASX – up around 12.3% since the start of the year – which should mean at least some entrepreneurs will see their fortunes bounce back on next year’s list.
So who has enjoyed the best comeback and who has made the biggest mistakes? Let’s hand out our annual Rich Pickings awards. The envelope please…
Comeback of the year
At an age when most people are in the second or even third decade of their retirement, 89-year-old Len Ainsworth is enjoying something of a career renaissance.
While Ainsworth is best known as man who turned gaming machine maker Aristocrat Leisure from a back-street maker of dental equipment into the world’s second-largest pokies maker, the last decade of his life has been dedicated to building a second pokies company called Ainsworth Game Technology.
It’s been a slow and difficult process, fighting to break into the lucrative North American market and fighting against the might of his larger rivals – including, of course, Aristocrat. But in the past two years, Ainsworth’s perseverance has been rewarded with a firm foothold in America and strong profits.
The stock has increased a remarkable 400% since the start of the year, which means the value of Ainsworth’s shareholding in the company – now up to $443 million – is now greater than the value of the stake he still holds in Aristocrat Leisure.
Ainsworth shows no signs of retiring or even slowing down any time soon. And more power to him.
Mistake of the year
It’s an affliction suffered by entrepreneurs big and small, rich and poor – an inability to properly value the company that you founded. Actually, the rich are usually pretty good at knowing when to sell out, but this year we saw one of the worst examples of holding on too long.
It was clear from last year that 2012 would be a difficult year for surfwear giant Billabong, which had already signalled store closures and hired former Target boss Launa Inman to conduct a review of operations.
So it was no surprise when Billabong received a $3.30 a share takeover offer. What was surprising was the reaction of founder, director and major shareholder Gordon Merchant, who declared he wouldn’t sell for less than $4.
TPG quickly walked away and within four months, Billabong’s position had deteriorated to the point it had to sack its CEO, raise $225 million and totally restructure its operations. The shares fell to 96c.
TPG eventually lobbed another bid of $1.45 a share, which it then abandoned. Another private equity firm, Bain Capital, made a takeover bid and abandoned this after a matter of weeks. A Billabong executive, Paul Naude, then made a bid.
Merchant remains on the board. He shouldn’t.
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