It’s a problem that every budding entrepreneur would love to have.
If one of the world’s richest and most famous investors bought a stake in your company, would you sleep better knowing you’ve got their considerable support behind you, or would you toss and turn under the weight of expectation?
Les Emery, managing director of Perth-based copper and gold miner Marengo Mining, has been giving this problem a lot of thought this week. On 1 September, one of the world’s most famous investors, George Soros, bought a 20% stake in Marengo through his investment funds.
Soros, who is worth around $US11 billion according to Forbes magazine, is known as one of the world’s great currency speculators and investors. He’s the guy who bet $US10 billion on the British pound falling back in 1992 – and won.
So how have Emery’s night been? “I sleep soundly all the time, mainly because I’m too busy and don’t get enough sleep,” he laughs.
“I’m very happy to have a group like Soros Group on board. It takes away a lot of the concerns of a junior miner in terms of being recognised. It’s confirming that we are doing the right thing and it’s working.”
Marengo is in the process of developing a $1 billion copper and gold project in Papua New Guinea. For any junior miner, access to capital is a constant challenge and often small companies need to sell themselves to bigger miners to get their project over the line.
Emery hopes the support of investors like Soros can help prevent that occurring.
“If you’ve got the right type of people around you and investing in you that makes that task easier to a certain extent. By having some strong financial muscle behind you it means you are not forced into making those tough decisions.”
He’s yet to meet Soros, but has read several of his books and admires the story of the Hungarian Jew who survived World War II and became one of the biggest currency traders on the globe.
“If you are trying to convince people you can work from the bottom up and succeed, you’ve got one of the best examples right there,” Emery says. “It shows that small companies can turn into big companies.”
Soros, who also owns a stake in local mining company Sphere Investments, is one of a number of foreign billionaires who own stakes in Australian companies, either directly or through their investment vehicles.
Perhaps, given the strength of the Australian economy and particularly the resources sector, we’ll see more billionaires join the list below.
Flamboyant entrepreneur Richard Branson recently lifted his stake in Virgin Blue from 25% to 30% after participating in the company’s $231 million capital raising. The Virgin Blue stake remains one of Branson’s biggest investments in a publicly-listed company.
Hong Kong billionaire Li Ka-Shing (whose fortune is valued at around $US16.2 billion) controls Hutchison Whampo, which is the biggest shareholder in Australia’s Hutchison Telecommunications. The local subsidiary recently merged its operations with those of Vodafone.
US hedge fund figure Philip Falcone is the co-founder of Harbinger Capital, which controls around $US9 billion of assets. Falcone, whose net worth is around $US2.3 billion, is another foreign investor who has targeted the Australian resources sector. The fund has a string of investments in Australian companies, including Forestcue Metals Group, Poseidon Nick, Murchison Metals and Po Valley Energy. The fund also owns a stake in “air-to-water” firm Island Skye and consumer goods company Breville.
The exact wealth of German resources sector investor Hans Mende is not known, but he holds close to $1 billion of investments in the Australia coal sector, via stakes in Felix Resources, Whitehaven Coal and Gloucester Coal. These are held through his trading and investment company, ACMI, in which Mende owns a 50% stake.
Ukrainian investor Gennadiy Bogolyubov acquired Consolidated Minerals earlier this year in a $US1.2 billion deal, but the billionaire (Forbes says he is worth $US1.7 billion, to be precise) still holds a stake in manganese miner OM Holdings.
German identical twins Thomas and Andreas Strüngmann are worth $US3.6 billion, according to Forbes. Most of their wealth comes from the generic drugs business they founded called Hexal AG. This business was sold in 2005 for $US7.5 billion, but the pair now run an investment company called Santo Holding, which counts Australian oil explorer Otto Energy among its holdings.
Another investor in Otto Energy is Otto Happel, who is worth $US2.7 billion. Happel built his father’s dust removal business into an engineering firm before selling out. He now holds a number of investments in the global energy sector.
The ruler of Oman (who was valued at $US1.1 billion by Forbes in 2008) set up the Oman Investment Fund in 2006 via a special decree. In April, the fund invested a total of $160 million in Melbourne-based company Becton, taking a stake of 9.9%.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
