Middle East's richest find fortunes fell after downturn

Many of the Middle East's wealthiest merchant families have lost as much as a third of their fortunes since the onset of the global financial crisis in 2008, according to a new report.

The billionaire owners of some of the biggest family trading empires in the region have suffered a 33.5 per cent reduction in wealth between 2008 and last year. Pawan Singh / The National
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Many of the Middle East's wealthiest merchant families have lost as much as a third of their fortunes since the onset of the global financial crisis in 2008, according to a new report.

The billionaire owners of some of the biggest family trading empires in the region have suffered a 33.5 per cent reduction in wealth between 2008 and last year, according to a report from Société Générale Private Banking and Forbes Insights.

The report studied 21 billionaires in the UAE, Saudi Arabia, Kuwait and Lebanon, out of a global sample of 1,253.

Wealthy individuals who run businesses without involvement from their families fared much better, with levels of wealth down 3.6 per cent during the same period.

But both figures compare with an increase in wealth of the world's billionaires of between 2 and 9 per cent worldwide since 2008.

The precipitous drop in regional stock market values since the financial crisis, alongside a collapse in property prices, had contributed to the plunge in regional family wealth, said Eddy Abramo, the chief executive of Société Générale private banking in the Middle East.

"For the ones who were very leveraged, there's a deleveraging," he said. "But there is also a re-leveraging, regarding their credit lines for their portfolios - they try to get some new credit lines for cashing out."

Even as recovery starts to take hold in the global economy, levels of leverage among Middle East family businesses were higher than the global average, said Jean-François Mazaud, the head of Société Générale private banking.

The region's self-made billionaires fared better than those who inherited fortunes or had taken the helm of family businesses, with wealth levels flat in comparison with 2008.

Those in the region whose wealth had come through inheritances and income from their commercial activities had continued to decline by 1.5 per cent during 2010.

The fortunes of family-owned companies have varied, but the experience of Dubai's debt crisis has left many family offices in the emirate feeling chastened, while Abu Dhabi's family-owned businesses have been more likely to conduct acquisitions, asset managers said.

Abdulla Al Masaood & Sons, a conglomerate that owns the franchise rights to Harley-Davidson, is in talks to acquire brands in the consumer goods sector, said Constantin Salameh, the chief executive of Abdulla Al Masaood& Sons in an interview last month.

"We believe that as a number of groups are deleveraging, we could get some interesting assets with attractive valuations," he said.

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