Australia’s next billionaires?
THE most stunning performance on this year's BRW Young Rich list undoubtedly comes from Mike Cannon-Brooks and Scott Farquhar, the founders of Sydney-based technology firm Atlassian.
The pair's valuation soared from $56 million to $314 million, after a $US60 million investment from US venture capital firm Accel Partners sent the valuation of the company, which focuses on collaboration and software development tools, through the roof.
While revenue remains well below the $100 million mark, the pair, who are just 30 years old, stand out as the leading lights of a new generation.
Last week we examined the Forbes 400 list and the way the top echelons of American wealth are changing to reflect the rise of globally-focused technology entrepreneurs, and questioned where Australia's next generation of billionaires was coming from.
The Young Rich list provides some answers, but also suggests the pool of potential names is relatively small.
For example, the list includes 12 actors, sports stars and celebrities, who are unlikely to ever join the billionaire club. There are also 16 people who have sold their businesses in the last few years; they could potentially make it onto the billionaires' list, but it wouldn't be easy.
The list also includes 12 entrepreneurs from the property and construction sector. While property has traditionally provided a number of members of the billionaire club, the sheer number of entrepreneurs in this sector highlights how competitive it is, and how difficult it will be younger entrepreneurs to break into a sector dominated by names like Lowy and Triguboff.
However, the fact that technology is now the most prominent industry on the list is a great sign. While the bulk of the entrepreneurs from this category are well under $100 million – names include Leigh Japser and Rob Phillpot from Aconex, Pipe Network founders Stephen Baxter and Bevan Slattery and Trent Davis from Netbox Blue – there is a clearly a generation of tech stars headed for the main rich list.
So who could eventually reach the billionaires' club? There are few obvious contenders, including Tinkler, and a few longer-term prospects that may surprise.
With the warning that picking future billionaires is by no means an easy task, here are the key names to watch.
Young coal baron Nathan Tinkler is a clearly the most likely young entrepreneur to join the billionaires' club, with his fortune currently sitting at $610 million. There are a few very impressive parts of Tinkler's modus operandi.
Firstly, his biggest resources deals, where he purchased mining projects that had been ignored or dismissed by others, highlights his ability to spot opportunities where others cannot. Secondly, he is always prepared to sell when the price is right.
The one thing that might stop Tinkler reaching the top echelon on the rich list is his willingness to pour money into loss makers such as horse racing and soccer teams. But as long as these remain passions rather than prime investments, he should be fine.
With a fortune estimated at $US406 million, London-based fund manager Greg Coffey is the next most obvious candidate for membership in the billionaires' club. Coffey, aged 39, is co-chief investment officer at Moore Capital Management, a $US15 billion hedge fund firm owned by billionaire Louis M. Bacon. However, ascension to the very top of the rich list may require Coffey to start his own firm. He attempted to do this in 2008 (forgoing up to $US250 million in cash and shares from his former employer, GLG Partners) but was stymied by the GFC.
Like Coffey, Hilton Nathanson is a London-based hedge fund manager who is seen as one of the young guns of the City scene. Unlike Coffey, Nathanson owns his own firm, called Marble Bar Asset Management. However, Nathanson only regained control of the business in May. He sold it to Swiss bank EFG International in 2007 for $1.3 billion, only to see funds under management fall from $US6 billion to $US1 billion. Nathanson bought the business back with his management team in May, and promptly sacked half its staff. Clearly, the business will take time to rebuild, but Nathanson, aged 40, has plenty of time. His fortune is valued at $395 million.
Mike Cannon-Brookes and Scott Farquhar
Sydney duo Mike Cannon-Brookes and Scott Farquhar had already started and sold one business when they launched Atlassian in 2002. Clearly, the pair have a long way to go before they make the billionaires' club (as a team or individually) but the fact that they are well connected to Silicon Valley and receive the bulk of their sales from exports means they can leverage global customers and investors to grow.
Retail has underwritten a number of billionaire fortunes in Australia – Solomon Lew, Gerry Harvey and John Gandel are all good examples. If there is one entrepreneur that could one day join them, it's probably Geelong-based Nigel Austin, who is valued at $236 million. The owner of the Cotton On clothing chain, the Typo stationery chain and the Rubi shoes chain has 500 stores across Australia, Singapore, Hong Kong, New Zealand and the US, with China the next target. Clearly, this is a high volume, low margin business and as such it will be tough to grow it to the point where it's worth $1 billion. But by going global, Austin could just give himself an opportunity to become a billionaire.
Adelaide-based property developer Ross Makris was dropped from this year's list on the grounds that he has merged his property portfolio with that of his father, Con. Together, the Makris family is already worth more than $1 billion, so when Ross finally takes over the company he should automatically join the big club. The pair owns many of the best shopping centres in South Australia, and has also branched into residential projects in and around Adelaide. What will be interesting to watch is whether or not they make the move into other states.
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