Billionaires: Lululemon founder pledges $76m to save Canada's wilderness

In our fortnightly round-up of the world's super wealthy, Ray Dalio makes a gloomy prediction for stocks and the economy and SoftBank founder Masayoshi Son revives discussions of a third Vision Fund

Lululemon founder Chip Wilson says the money will be used to turn 'massive amounts of land' into parks that indigenous groups would use for revenue-making purposes. Bloomberg

Chip Wilson

Billionaire Lululemon Athletica founder Chip Wilson is making his biggest philanthropic gift — and one of the largest among Canada’s ultra-rich — to protect vast tracts of wilderness in the western part of the country.

Mr Wilson and his wife, Summer, have pledged C$100 million ($75.8m) through their foundation to acquire land in British Columbia's wilderness.

The province is home to 5.3 million people and holds temperate rainforests, rocky coastlines, snowcapped mountains and even desert lands in an area larger than Germany and France combined.

The money will be used by the BC Parks Foundation to buy forests and repurchase mining, forestry and other resource licences, turning “massive amounts of land” into parks that indigenous groups would manage and use for revenue-making purposes such as tourism, Mr Wilson said.

“Our vision for our family is providing components for people to live a longer, healthier and more fun life. So it all kind of fits,” said Mr Wilson, 67, whose $5.8 billion fortune is derived primarily from his 9 per cent stake in the athletic clothing company he started in Vancouver.

The couple, who live in Vancouver, are hoping to encourage matching donations from governments, businesses and other philanthropists to advance the BC Parks Foundation’s goal of protecting 25 per cent of the province’s land and water.

But they are setting few conditions on spending the funds, which could happen “quite quickly”, said Mr Wilson, Canada’s 13th-wealthiest person, according to the Bloomberg Billionaires Index.

Mr Wilson founded Lululemon more than two decades ago but fell out with the company and clashed with Christine Day, chief executive at the time.

He stepped down as chairman after he drew scorn for saying some women’s bodies “don’t work” for Lululemon’s stretchy bottoms in a 2013 interview with Bloomberg News. He sold down his stake and left the board in 2015.

Ray Dalio, the founder of Bridgewater Associates, says the US Federal Reserve will have to increase interest rates towards the higher end of the 4.5 per cent to 6 per cent range to rein in inflation. Reuters

Ray Dalio

Ray Dalio, the billionaire founder of the world's biggest hedge fund, came out with a gloomy prediction for stocks and the economy after a hotter-than-expected US inflation print rattled financial markets around the globe last week.

“It looks like interest rates will have to rise a lot [towards the higher end of the 4.5 per cent to 6 per cent range],” the founder of Bridgewater Associates wrote in a LinkedIn article last Tuesday.

“This will bring private sector credit growth down, which will bring private sector spending and, hence, the economy down with it.”

A mere increase in rates to about 4.5 per cent would lead to a plunge of about 20 per cent in equity prices based on the present value discount effect, he said. On top of that, he estimates a 10 per cent negative impact from declining incomes.

The rate market suggests traders have fully priced in a 75-basis-point increase this week by the US Federal Reserve, with a slight chance for a full percentage point move.

Traders expect the Fed fund rate to peak at close to 4.5 per cent next year, from the current range of 2.25 per cent and 2.5 per cent.

Mr Dalio, who has a net worth of $22bn, noted investors may still be too complacent about long-term inflation.

While the bond market suggests traders are expecting an average annual inflation rate of 2.6 per cent over the next decade, his “guesstimate” is that the increase will be about 4.5 per cent to 5 per cent.

With economic shocks, it may be even “significantly higher”, Mr Dalio said.

The US yield curve will be “relatively flat” until there is an “unacceptable negative effect” on the economy, he said.

A deepening inversion of key curve measures — seen by many as a potential harbinger of recession — has helped to reinforce a more downbeat view about economic activity among investors.

Investors, speculating that the Fed will tip the economy into recession next year in the fight to curb inflation, already see policymakers easing rates in the later stages of 2023.

The S&P 500 is heading for its biggest annual loss since 2008, while Treasuries have suffered one of their worst beatings in decades.

Masayoshi Son, the chief executive of SoftBank Group, is believed to be considering a third Vision Fund. Reuters

Masayoshi Son

Billionaire SoftBank Group founder Masayoshi Son has revived discussions of setting up a third Vision Fund, weeks after apologising for the disappointing performance of his first two funds, according to sources.

Mr Son, 65, has raised billions of dollars in cash recently and sees another start-up fund as one of several possible priorities for the money.

It’s not yet clear how much capital he would want to inject into a third fund, they said. The first Vision Fund was slightly less than $100bn with outside investors such as Saudi Arabia’s Public Investment Fund, while the second has more than $40bn and was solely financed by SoftBank.

A SoftBank spokesman did not comment in time for publication.

After unveiling plans for the initial Vision Fund, Mr Son said he expected to raise similarly sized funds every two to three years.

But he then made a series of disastrous mistakes, including investing in WeWork, Wirecard and Greensill Capital. The plunge in technology stocks this year has prompted SoftBank to write down its portfolio, with more than $40bn in losses in the past two quarters.

Mr Son, a self-made billionaire with a net worth of $11.5bn, founded his company four decades ago and prides himself on his contrarian business strategies.

He set up the first Vision Fund in part because he thought traditional venture firms were too stodgy and conservative. He may see the current moment — with tumbling stock prices and fearful investors — as the right moment to prepare for big bets.

Amancio Ortega, Zara founder and owner of Spanish textile company Inditex, has spent $722 million on the acquisition of a series of US logistics centres. EPA

Amancio Ortega

Zara founder Amancio Ortega has spent more than $700m in recent weeks on a series of logistics acquisitions in what is shaping up to be one of the biggest bets yet by the Spanish textile tycoon.

Mr Ortega’s family investment company Pontegadea bought five logistics centres in the US states of Tennessee, South Carolina, Virginia, Pennsylvania and Texas from Realty Income Corporation for about $722m, in a deal confirmed by a Pontegadea official.

Those acquisitions come after previously announced logistics purchases, also from Realty Income, which totalled $183m.

Taken together, the moves mark a strategic step into a new area of real estate from Pontegadea’s traditional focus on buildings such as apartments and office towers.

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The US logistics market has boomed in recent years, thanks to the e-commerce push spurred in large part by Amazon, with investors including KKR & Company and Blackstone snapping up warehouses and industrial properties.

Industrial property rents rose 21 per cent in the second quarter from a year earlier, with leasing volume up 6 per cent, according to a report by Jones Lang LaSalle. Pontegadea’s recently purchased logistics plants have long-term lease agreements with global players including Nestle, Amazon and FedEx.

Mr Ortega has made a number of big real estate deals this year, including paying about $500m for a 64-floor luxury apartment building in New York and agreeing to buy Toronto’s Royal Bank Plaza skyscraper for about C$1.2bn.

Mr Ortega’s personal fortune is valued at more than $46.8bn, making him the 24th-richest person in the world, according to the Bloomberg Billionaires Index.

The bulk of Pontegadea’s income comes from Mr Ortega’s stake in Zara owner Inditex, the world’s largest apparel retailer, which owns a range of clothing brands.