Billionaires: Mining magnate Gina Rinehart plans to sell cattle farms to cash in on global beef demand
In our fortnightly round-up, the reclusive Zhong Shanshan becomes Asia's richest man after his net worth surges to $85bn and Norway's Kjell Inge Rokke bets on Bitcoin
Australian mining billionaire Gina Rinehart plans to sell a portfolio of seven cattle farms in Australia, looking to cash in on her investment in the properties amid strong global beef demand.
Hancock Agriculture, a unit of Ms Rinehart’s broader Hancock Prospecting empire, and joint venture partner S Kidman & Co are marketing the portfolio through rural property specialist Elders and expect strong demand from domestic and international investors.
“This represents a rare opportunity to acquire a strategically constructed portfolio of assets at scale during a period of unprecedented growth in demand for quality Australian protein,” said Tom Russo, general manager of Elders' property division.
Market conditions are favourable for the sale: Australian cattle prices have surged to record highs as demand returns amid signs the global economy is recovering from the Covid-19 pandemic.
However, the country faces a chronic supply shortage, with herd sizes near their lowest since the early 1990s.
The portfolio covers nearly 1.9 million hectares of land across Western Australia and the Northern Territory, with the size of the cattle herd currently numbering about 108,500, Hancock Agriculture said.
The company, which is Australia’s second-biggest beef producer, had undertaken extensive capital works to improve the properties and is now looking “to complete its investment cycle and focus on other areas of growth in its agricultural operations”.
Elders will begin marketing the portfolio in March, with offers for all or part of the portfolio for consideration.
Until recently, few people had heard of Zhong Shanshan, a reclusive billionaire who built a fortune on China's seemingly unquenchable demand for his ubiquitous red-capped bottled water product.
Mr Zhong has become Asia’s richest man after last year's separate listings of mineral water supplier Nongfu Spring and diagnostics company Wantai Biological Pharmacy Enterprise, which tapped into massive demand for Covid-19 test kits.
Mr Zhong's net worth has surged to $85bn and made him the seventh-richest person on the planet, Hurun Report, a China-based compiler of "rich lists", said.
Described as a "lone wolf" by Chinese media for his rare public appearances and aversion to interviews, Mr Zhong has achieved one of the fastest accumulations of wealth in history, according to Bloomberg.
He became the first Chinese entrepreneur to enter Hurun's list of the world's 10 richest people this year, leaping out of nowhere to rank close behind Facebook's Mark Zuckerberg and American investor Warren Buffett.
Not bad for someone who dropped out of school at the age of 12 during the political upheaval of China’s Cultural Revolution between 1966 and 1976. Mr Zhong worked as a bricklayer, carpenter and news reporter during his early years, according to Chinese media.
He founded Nongfu Spring in 1996 and still owns an 84 per cent stake in the company which, according to market research company Mintel, controls more than a quarter of the bottled water market in China, where many people avoid tap water over health concerns.
Bitcoin may still go to zero. But it can also become the core of a new monetary architecture
Kjell Inge Rokke, director of Aker
In contrast to charismatic Alibaba founder Jack Ma – who Mr Zhong dethroned as China's richest man – little is known about Nongfu's billionaire boss aside from his gruff character.
"I don't have the habit of flattery in my personality," he once told Chinese media in a rare interview.
His fortunes have risen while those of Chinese technology companies have slid.
Mr Ma is now worth $55bn, according to Hurun, after government regulators launched an anti-monopoly investigation into his technology empire, a development that pummelled Alibaba’s share price and left a massive initial public offering by financial arm Ant Group in limbo.
Alongside Nongfu, which listed last year in Hong Kong, Mr Zhong is also the biggest shareholder in Wantai, which went public in Shanghai.
The group’s rapid Covid-19 test gives results in 75 minutes. According to its website, the company has shipped more than 10 million kits.
Wantai and a prominent university are also developing a Covid-19 vaccine nasal spray.
The company is the biopharmaceutical arm of the Yangshengtang Group, a medical company Mr Zhong founded three years before Nongfu.
Yangshengtang specialises in infectious diseases and says it is the largest producer in Asia of an HIV diagnostic reagent.
Hurun says the share listings make Mr Zhong one of only a handful of entrepreneurs in the world today that have founded more than one $10bn business.
Kjell Inge Rokke
Norwegian oil billionaire Kjell Inge Rokke has come out strongly in favour of Bitcoin as he wagers that the cryptocurrency will prove to be the best defence against the disruption facing the finance industry and central banks.
Mr Rokke’s Aker, which controls oil and oil service companies, has more recently branched out into green technology and renewable energy companies. It is setting up a new business, Seetee, to tap into the potential of Bitcoin.
“Bitcoin may still go to zero. But it can also become the core of a new monetary architecture,” Mr Rokke, Norway’s second-richest person with an estimated $5.4bn net worth, said in a shareholder letter. He says it is not inconceivable that one Bitcoin could one day “be worth millions of dollars”.
“People who know the most about Bitcoin believe its future success is nearly inevitable,” said Mr Rokke.
Bitcoin has continued to divide opinion after a volatile start to the year. A single coin cost more than $57,000 at one point last month, up from $8,000 about a year ago.
The cryptocurrency has won some notable endorsements of late, including from Elon Musk. It has also been associated with some nail-biting investing moments.
Despite the volatility, there is growing evidence that Bitcoin is being embraced by some of the most influential members of the global financial industry.
Cathie Wood’s ARK Investment Management said Bitcoin could be part of a normal portfolio while Goldman Sachs is currently working to bring back its cryptocurrency trading desk as it responds to substantial demand for digital assets from institutions.
The situation differs from the 2017 Bitcoin bubble owing to “huge” institutional demand across different industry types and from private banking clients, according to Matt McDermott, head of digital assets in Goldman Sachs' Global Markets Division.
For now, Mr Rokke’s investment will be small, with Seetee set to with just 500 million kroner ($58m) in capital. The company plans to keep all its liquid investable assets in the cryptocurrency.
Aker’s Seetee plans to invest in the digital asset, establish partnerships with leading players in the Bitcoin and broader blockchain community, launch the cryptocurrency's verification operations and invest in innovative projects and companies.
The Norwegian industrial company, whose roots date back 160 years, has been an active investor in industrial software, FinTech and green energy value chains.
Its latest cryptocurrency venture is intended to help it pursue developments in cyber security, financial transactions and emissions-free verification operations, it said.
“The direction is clear: finance will be disrupted as surely as fossil fuels will be,” says Mr Rokke. “The question is not if, but when.”
Activist investor Carl Icahn is in discussions with FirstEnergy about potentially taking two seats on the board of the utility.
The billionaire investor has built a sizeable stake in FirstEnergy and is focused on helping the company put a federal corruption scandal and other issues behind it to narrow the valuation gap between it and peer organisations.
He is not seeking control of the board, in part, because the utility sector is so heavily regulated when it comes to changes of control. However, talks are ongoing between the parties.
Mr Icahn has a history of helping companies navigate through challenging times, including famously defending Herbalife Nutrition against fellow activist investor Bill Ackman, who was shorting its shares.
A representative of Mr Icahn declined to comment while a representative for FirstEnergy was not immediately available for comment.
In February, Mr Icahn notified FirstEnergy that he intended to acquire a stake valued between $184m and $920m. FirstEnergy at the time said it did not know whether the billionaire investor had already acquired any shares or derivatives, or what his intentions were. It is unclear what the size of Mr Icahn’s stake is now.
FirstEnergy has been embroiled in a federal corruption case since last summer. It involves the arrest of former Ohio House Speaker Larry Householder and four political associates accused of receiving about $61m in bribes to secure a bailout for nuclear plants owned by a former FirstEnergy unit.
There is now meaningful room for FirstEnergy’s shares to be re-rated after trading at a substantial discount to its peers – even before its legal issues arose in mid-2020 – and with a visible path to resolve the issues in Ohio, says Julien Dumoulin-Smith, an analyst with Bank of America.
Mr Dumoulin-Smith wrote in a note to clients that Mr Icahn’s increasing involvement in FirstEnergy was a key angle to watch. He revised his price target from $32 a share to $37 and raised his rating from "neutral" to "buy".
Updated: March 13, 2021 01:20 PM