TIME russia

7 Western Assets Owned (for Now) by Russian Billionaires

Will the tanking Russian economy prompt its billionaires to shed their high profile holdings in the U.S. and Europe?

Russian billionaire Mikhail Prokhorov is reportedly looking for a buyer for the NBA basketball team he bought five years ago, amid speculation that the his country’s shrinking economy may have squeezed his finances.

The 49-year-old businessman, worth roughly $11.1 billion, wants to unload the Brooklyn Nets, Bloomberg reports. A spokesman for Prokhorov told Bloomberg that the team is open to sale offers.

There are many reasons that Prokhorov, the first foreign owner of an NBA team, could be considering a sale. The team has suffered a dismal start to the season after a poor record last year, sinking his plans for a spot in the championships within five years. The team has also lost about $144 million in the last year, according to ESPN.

The billionaire may also be capitalizing on an apparently hot market for NBA teams after former Microsoft CEO Steve Ballmer bought the Los Angeles Clippers last year for a record $2 billion. The Nets have been valued at around $1.3 billion, which means a sale could net Prokhorov nearly $1 billion in profits from his original, $220 million stake.

But as the Russian economy crumbles under falling oil prices and tough Western sanctions, the nation’s business elite are feeling the pressure. Last month alone, Russia’s richest 20 people — Prokhorov included — lost a combined $10 billion as the value of the ruble tumbled. They lost a combined $62 billion across the year, according to the analysis by Bloomberg.

And Prokhorov’s not alone. Russian billionaires have snapped up marquee items in Europe and the U.S., from sports teams to properties. There are growing fears that the downturn in Russia may prompt some of them to sell off their properties to cover losses.

Here’s a look at some of the highest profile assets owned by Russian oligarchs.

  • The Brooklyn Nets

    General view as fans watch a tip-off between the Brooklyn Nets and Orlando Magic at the Barclays Center on Nov. 9, 2014 in Brooklyn, New York.
    General view as fans watch a tip-off between the Brooklyn Nets and Orlando Magic at the Barclays Center on Nov. 9, 2014 in Brooklyn, New York. Alex Goodlett—Getty Images

    Mikhail Prokhorov, the seventh-richest Russian and the 107th richest person in the world, bought the team and a share of the team’s new Brooklyn arena, the Barclays Center, in 2010 (according to Bloomberg, his share of the arena is not for sale). The team made it to the playoffs in 2013 but still have little to show for high profile acquisitions of aging stars Paul Pierce and Kevin Garnett.

  • Arsenal

    Arsenal players celebrate victory with mascot Gunnersauraus Rex after the FA Cup with Budweiser Final match between Arsenal and Hull City at Wembley Stadium on May 17, 2014 in London.
    Arsenal players celebrate victory with mascot Gunnersauraus Rex after the FA Cup with Budweiser Final match between Arsenal and Hull City at Wembley Stadium on May 17, 2014 in London. Clive Mason—Getty Images

    In 2007, Alisher Usmanov bought an initial stake in the Arsenal Football Club and now owns about 30% of the team. The Gunners won an FA Cup title last year after a nearly decade long drought, but 2014 wasn’t all good news for Usmanov, who lost the title of richest man in Russia to Viktor Vekselberg.

  • 15 Central Park West

    15 Central Park West, a luxury condominium building, stands in New York, U.S., on Jan. 6, 2009.
    15 Central Park West, a luxury condominium building, stands in New York, U.S., on Jan. 6, 2009. Bloomberg/Getty Images

    The record-breaking $88 million purchase of a penthouse on Central Park West in New York City in 2012 was linked to Dmitry Rybolovlev, who made his fortune in the fertilizer industry. But Rybolovlev, worth $10.2 billion, could lose the property in an ugly and very expensive divorce settlement; in May, a Swiss court ordered him to pay a record-breaking $4.5 billion this year.

  • AS Monaco

    Yannick Ferreira Carrasco of Monaco shoots at goal during the French Ligue 1 match between AS Monaco FC and LOSC Lille at Louis II Stadium on Aug. 30, 2014 in Monaco,
    Yannick Ferreira Carrasco of Monaco shoots at goal during the French Ligue 1 match between AS Monaco FC and LOSC Lille at Louis II Stadium on Aug. 30, 2014 in Monaco, Kaz Photography/Getty Images

    Dmitry Rybolovlev lives in Monaco, where he has owned a majority stake in the local soccer team since 2011 and helped the red and white bounce back from a lengthy slump to be one of Europe’s strongest competitors — and biggest spenders. Could a record-setting divorce settlement representing half his fortune (though he’s still contesting the court’s ruling) and the effects of the dropping ruble push Rybolovlev to change that approach?

  • Star Island estate

    Single family homes on Star Island and the Venetian Islands are seen June 3, 2014 in Miami.
    Single family homes on Star Island and the Venetian Islands are seen June 3, 2014 in Miami. Joe Raedle—Getty Images

    Russian Vodka tycoon Roustam Tariko spent $25.5 million for an estate on Miami Beach’s Star Island in 2011, the largest Miami Beach sale in more than half a decade.

  • Chelsea F.C.

    Diego Costa of Chelsea celebrates with team-mates after scoring his team's second goal during the Barclays Premier League match between Chelsea and Newcastle United at Stamford Bridge on Jan. 10, 2015 in London.
    Diego Costa of Chelsea celebrates with team-mates after scoring his team's second goal during the Barclays Premier League match between Chelsea and Newcastle United at Stamford Bridge on Jan. 10, 2015 in London. Richard Heathcote—Getty Images

    Roman Abramovich shattered the record price paid for British soccer teams in 2003 when he paid $233 million for Chelsea FC. The steel tycoon, today Russia’s fourth wealthiest man, poured money into the team — until it made a profit last year — and helped it become one of the best in Europe. The team has won three Premier League titles as well as Europe’s Champions League under Abramovich’s ownership. While Abramovich’s fortune has shrunk by nearly two percent in the past year according to Bloomberg, representing a loss of more than 200 million dollars, he has given no indication of wanting to sell the team.

  • One Hyde Park

    One Hyde Park is seen London on May 2, 2014.
    One Hyde Park is seen London on May 2, 2014. Paul Hackett—Reuters

    Foreigners, including suspected Russian oligarchs, swooped in to buy up apartments in One Hyde Park, London’s most exclusive — and most expensive — residential tower. Some of the owners’ identities have been confirmed, like Ukrainian billionaire Rinat Akhmetov, who spent $220 million on an apartment. That was a record high spent in the U.K., until it was surpassed by another One Hyde Park buyer. But in the wake of the rubles plummet, Russian buyers in London’s luxury market have all but vanished, brokers told Bloomberg News last month.

TIME Hong Kong

Trouble in Hong Kong? Beijing Summons Tycoons

Xi Jinping, Tung Chee-hwa
Chinese President Xi Jinping, right, meets with a delegation of Hong Kong's industrial and business circles headed by Tung Chee-hwa, left, in Beijing on Sept. 22, 2014 Rao Aimin—AP

Beijing has long courted the tycoons, who employ hundreds of thousands of people, for the influence they have in the capitalist enclave of Hong Kong

(HONG KONG )— As trouble brews in Hong Kong, who’s Beijing going to call? The billionaires.

With political tension in the southern Chinese financial hub at its highest in years, China’s leaders summoned dozens of the city’s tycoons earlier this week for talks.

The rare trip by the large contingent of business leaders to meet President Xi Jinping in Beijing highlighted the unlikely role that Hong Kong’s capitalists have played as longstanding supporters of China’s communist rulers.

“I see most of my old friends,” Xi said with a light chuckle as he sat down for the meeting with 70 of Hong Kong’s richest and most powerful people.

Seated next to him in the Great Hall of the People was billionaire businessman Li Ka-shing, Asia’s wealthiest person, who Xi greeted with a hearty double-handed handshake. Between them was Tung Chee-hwa, son of a shipping magnate who China anointed as Hong Kong’s first leader after taking back control of the former British colony in 1997. Other Hong Kong billionaires with interests in property, media, banking and finance and casinos filled out the ranks.

Beijing has long courted the tycoons, who employ hundreds of thousands of people, for the influence they have in the capitalist enclave of Hong Kong.

The meeting coincided with the start of a protest involving thousands of Hong Kong college students against Beijing’s refusal to grant democratic reforms that would let Hong Kong’s people have a genuine say in electing their own leader. It also came ahead of a planned rally by pro-democracy activists to “occupy” the Asian financial hub’s central business district as early as next week, which has raised the hackles of business leaders.

The central business district is Hong Kong’s “lifeline” as a global financial center and occupying it would be “tantamount to destroying the Great Wall” — a potent national symbol — billionaire property developer Lee Shau-kee told Hong Kong reporters after the meeting with Xi.

“Hong Kong will lose its advantage and its prosperity will wane. It’s unwise,” he said, calling for the organizers to stop.

Henry Tang, the heir to a Shanghai textile fortune and former senior government official, said Xi supports the Hong Kong government’s work and said candidates for Hong Kong leader must be “patriots.”

Beijing used the meeting to reinforce its message that candidates for Hong Kong leader in promised elections must first be screened by a committee in tune with the priorities of China’s leadership. The stance has sent tensions soaring in the former British colony. Surveys show the approval rating of the city’s Beijing-backed leader, Chief Executive Leung Chun-ying, is plummeting while distrust of China’s central government is at the highest level since the handover.

Discontent, especially among the young, is fuelled by a widening wealth gap that many blame on the billionaires, a large number of whom made their fortunes in property development and also sit on a panel that selects Hong Kong’s leader. Once revered for their business acumen, they’re now reviled for cozy ties with the government, which tightly controls the supply of land for development, making home ownership unaffordable for many.

Monday’s meeting was the first time that such a big delegation has travelled to the Chinese capital since 2003. That year, a similar group made the journey after more than half a million took to the streets to protest a deeply unpopular plan to introduce anti-subversion legislation.

For the tycoons, supporting China’s communist leaders ensures their business interests survive, analysts said.

“Beijing thinks that Hong Kong people are economic animals, so they think that if they can get the tycoons lobbying for support” there is a better chance residents will accept its decision to curb democratic reforms, said Willy Lam, a political analyst at Chinese University of Hong Kong.

As a reward for falling in line, “Beijing has given them reassurance that they will not be marginalized by huge Chinese companies,” said Lam.

Most of Hong Kong’s tycoons are private entrepreneurs who founded their own companies, in contrast with China’s big state-owned firms that have a growing presence in Hong Kong.

Investments by Hong Kong tycoons in mainland China is another source of political leverage for Beijing.

“Beijing thinks that these tycoons can be held hostage because of their big exposure in China,” said Lam. “The tycoons dare not go against Beijing simply because they have so much at stake in the China market.”

Hong Kong’s tycoons are also worried about other reforms demanded by democracy activists, chiefly replacing seats in the legislature held by business groups with directly elected ones, said Sonny Lo, a governance expert at the Hong Kong Institute of Education.

Big business is concerned that if its say in the legislature is eroded, the freewheeling capitalist hub could be put on a path to a European social welfare state by requiring companies to provide more benefits to workers, he said.

Last month, a Chinese legal scholar on a committee overseeing Hong Kong’s mini-constitution made a rare acknowledgement that these concerns are also on Beijing’s mind.

“To some business elites, if the democrats can capture the entire Legislative Council, then social welfarism would likely be the result that would undermine the economic prosperity of Hong Kong,” Lo said.

MONEY ETFs

Invest Like Warren Buffett—Or at Least Like He Did Two Months Ago

A new ETF seeks to mimic the best ideas of billionaires like Warren Buffett and Carl Icahn based on their public holdings. Trouble is, the fund can't copy them in real time.

Mom-and-pop investors hoping to emulate the investment savvy of Wall Street’s wealthiest like Warren Buffett and Carl Icahn will have a new option on Friday when the latest low-cost exchange-traded fund tracking the stock picks of big-name investors begins trading.

The Direxion iBillionaire ETF, set to trade under the ticker “IBLN,” is the latest in a handful of similar ETFs that have come to market in recent years, all packaging the holdings disclosed quarterly by top investment managers into instruments that are more accessible to Main Street investors.

“It democratizes a lot of the information that very wealthy institutional investors have had for a long time,” said Brian Jacobs, president of Direxion Investments, the ETF provider that has partnered with index creator iBillionaire.

At $65 for every $10,000 invested, fees for the new iBillionaire ETF are far lower than the $200 that would be charged by the typical billionaire-run hedge fund, which would also tack on performance fees.

To be sure, the iBillionaire ETF, like the similar Global X Guru ETF launched in 2012, focuses only on the long portion of these billionaire portfolios and does not include day-to-day active management or any shorting of stocks. Furthermore, the practicalities of pulling investment ideas from the quarterly reports filed by these large investors means that the investment ideas often lag by at least 45 days.

The new ETF is based on an index created in November by startup firm iBillionaire. The fund and its underlying index include the 30 top U.S. companies in which a pool of selected billionaire investors have invested the most assets, based on the so-called 13F disclosures the investors must file quarterly with the U.S. Securities and Exchange commission. Top holdings in the index right now include Apple, Micron Technology and Priceline, with about a third of its portfolio in technology stocks.

“Billionaires are more bullish on technology” right now, said Raul Moreno, chief executive officer and co-founder of iBillionaire. “You can see that by their allocation and their strategies.”

The ETF is similar to the GURU ETF and AlphaClone Alternative Alpha ETF, which both launched in 2012. While they had both beat the benchmark S&P 500 index with stellar performances in 2013, they have been more lackluster this year, with GURU up 0.6 percent and ALFA up 0.3%, compared to the S&P 500, up 4.5% through Thursday’s close.

So far, these funds have a niche following – The GURU ETF has amassed about $499 million in assets, while the ALFA ETF has amassed $79 million in assets. So the billionaires being copied need not worry about losing clients to them, said Ben Johnson, an analyst with research firm Morningstar.

For a related story, see:

Inside Warren Buffett’s Brain

TIME Billionaires

The World’s Youngest Billionaire is Just 24 and She’s From Hong Kong

HONG KONG-CHINA-MILITARY-DEFENCE
The fabled Hong Kong skyline. The city is home to 45 billionaires, including the world's youngest PHILIPPE LOPEZ—AFP/Getty Images

Perenna Kei is described as "secretive," which is probably a very sensible thing for a young person in her position

There’s a new kid in town on Forbes magazine’s annual ranking of the world’s billionaires.

24-year-old Perenna Kei Hoi-ting is now the the youngest billionaire in the world, displacing Facebook co-founder Dustin Moskovitz.

The wealthy Hongkonger who is also known by the name Ji Peili studied finance in London, has an estimated net worth of $1.3 billion and holds 85 per cent of Logan Property, of which her father Ji Haipeng is the chairman and chief executive, but little else is known about her.

She is one of 42 new female billionaires on the list and one of 45 billionaires from Hong Kong. Microsoft founder Bill Gates is back at the top of the list and is estimated to be worth $76 billion.

[South China Morning Post]

TIME Wealth

Record Number of Women on Forbes’ Billionaires List

Sheryl Sandberg 'Lean In' Japanese Edition - Press Conference
Jun Sato—WireImage

A record 172 women are worth ten figures, up 25% from last year

Forbes’ annual list of billionaires includes a record 172 women this year, up 25% from last year’s 138 female billionaires.

Facebook chief operating officer Sheryl Sandberg made the list for the first time, and of the 268 newcomers to the list, 42 are women, the highest share of new female billionaires ever.

Other newly minted female billionaires include Folorunsho Alakija, a self-made Nigerian billionaire who made her $2.5 billion in the oil industry, and Denise Coates, who made her $1.6 billion from her online gambling company, Bet365.com. Two of Estee Lauder’s granddaughters also make the list this year, Aerin Lauder Zinterhofer and Jane Lauder, who each oversee other companies now. Zinterhofer runs her own lifestyle empire, Aerin, and Lauder will take the helm at Clinique in April.

Other veteran billionaires like Oprah Winfrey, Hewlett Packard CEO Meg Whitman and Spanx creator Sara Blakely returned to the list this year. The richest woman in the world is Christy Walton, heir to the Wal-Mart empire founded by her father-in-law. She’s the only woman in Forbes’s top 10.

The list numbers a total of 1,645 billionaires worth a combined total of $6.4 trillion, up from $5.4 trillion last year, which means another trillion dollars are in the hands of the planet’s richest people. Women make up a little under 10% of the total billionaire population.

[Forbes]

MONEY

Tell the Billionaires Where to Give

As you’ve probably heard, billions of dollars will be flowing into charitable organizations worldwide in the coming years, thanks to the Giving Pledge, a project spearheaded by Warren Buffett and Bill and Melinda Gates.

Thus far, about 40 U.S. billionaires have agreed to give away at least 50% of their wealth, according to the Giving Pledge. And while the Giving Pledge hasn’t released a tally, Forbes.com estimates that America’s wealthiest will give away an additional $120 billion or more in the years to come.

Considering that the total charitable giving in the U.S. has been hovering at about $300 billion per year for the last few years, according to the Giving USA Foundation, the amount pledged represents an astounding increase. While many billionaires will continue to give to causes they hold dear, perhaps some will be open to suggestions.

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