Today SmartCompany kicks off a week of celebrations for its fifth birthday. With this in mind, it’s time to dust off the crystal ball and ask a big question: “What will the rich list look like in five years time”?
Five years is a long time in the world of the wealthy. In the last five years, we’ve seen Gina Rinehart’s fortune rise from a lowly $4 billion to a staggering $20 billion, just as we’ve seen James Packer fall more than $7 billion to around $4 billion.
The GFC has restructured entire industries and technology has changed many more. Retail stars like Gerry Harvey have been hit hard. Fortunes built by the likes of ABC Learning’s Eddy Groves and Babcock & Brown’s Phil Green have disappeared. New tech heroes such as TPG’s David Teoh have emerged.
Given the pace of this change, making predictions is a mug’s game. But there are few major trends that are worth pointing out.
Give me a number between $20 billion and $200 billion and I’ll be able to make a case that Gina Rinehart is that rich.
The current estimates of her wealth are extremely conservative and based on the concrete numbers around her fortune – royalties flowing into Hancock Prospecting, deals signed, and cash paid.
But start making assumptions about commodity prices or her ability to bring new projects on stream and you can quickly build her estimated fortune as high as you want. Provided commodity prices and demand from China remain strong, a doubling of Rinehart’s fortune to somewhere around $40 billion seems reasonable.
Of the top 20 members of the Rich 200 in 2011, eight will be aged 80 or more by 2017 and 11 will be older than 75.
While the best in modern medicine and seemingly boundless energy will ensure most of these men (and they are all men) will be still going in five year’s time, succession will clearly be one of the big issues for list members. I predict that many of the billion dollar fortunes currently attributed to an individual will end up being held within a family unit or dispersed amongst family members. In other words, there will not be one single person emerging to inherit, as James Packer did when Kerry Packer died.
What will be interesting to see is whether these families stay together to act as one cohesive unit (as say the Millner or Tieck families do) or whether the heirs go the separate ways and become rich lists forces in their own right. Let’s hope for the latter – it will be much more exciting.
OK, I’m now in big call territory. In 2011 the billionaires with media interests were James Packer, Kerry Stokes, Paul Ramsay and Bruce Gordon, while the retailers were Gerry Harvey and Solomon Lew (I’m counting Frank Lowy and John Gandel as property magnates, not retailers). As the media and retail sectors continue to battle structural change driven largely by technology, the billionaires club will also change.
If the retail malaise continues, Harvey and Lew may need to fight to retain their billionaire status. Most of the media barons will are likely to continue to switch their focus to their other areas of their empires – gaming for Packer, heavy equipment for Stokes and healthcare for Ramsay.
This is not a big call. The number of women on the BRW Rich 200 has fallen from 17 to 15 over the past decade and this trend shows no sign of being reversed.
Indeed, the number of women on the Young Rich list of entrepreneurs aged 40 fell from eight to seven last year and the highest-ranked woman, Prue Eales, who is listed with husband Laurence, is a long way away from the main rich list with a fortune of $50 million. It is likely that the new female members of the main rich list will be children of existing rich list members who emerge after the death of their parents.
Just as the Australian population is ageing, so is our rich list. The average age of list members in 2011 was 64 and that will hover around 70 in five years time. Interestingly, there does not appear to be a big group of young entrepreneurs set to storm onto the list and bring the average age down.
Only eight members of the current Young Rich list have fortunes above $200 million and only 14 have more than $100 million. In five years, rich list members will probably need $280-$300 million to get onto the list – that may be a bridge too far for many of these entrepreneurs.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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