After the credit crisis it’s the Not-So Rich List
The UK’s wealthiest financiers saw their fortunes dented last year as the turmoil took its toll
It may not feel like a great time to work in finance, but spare a thought for everyone else.
According to the annual Sunday Times Rich List, the 131 people on it who have made their money from the financial services sector, such as banking dynasties, hedge fund managers, traders and private equity specialists, together with investors, saw their total fortunes fall by nearly 27% in 2008 to £24bn. However, in spite of the hit to their wealth, financiers fared better than many others on the list, which numbers 1,000, whose total wealth plummeted 37.5% to £257.7bn.
The number of billionaires on the list fell to 43, from last year’s record number of 73.
The financiers’ fortunes also compared favourably with the FTSE 100, which dropped 31% last year. Philip Beresford, who compiles the annual Rich List, said: “The top hedge fund guys have largely performed pretty well. Some have read the markets very well, such as David Harding, and are simply piling up the noughts in their bank balances. For bankers it has been less rosy unless your name happens to be Hoare.”
Across the board, super-wealthy hedge fund managers, such as Arpad Busson, Greg Coffey and Noam Gottesman, saw their fortunes fall 25.9% to £6.75bn.
Those multi-millionaires who made their names in insurance only saw their collective wealth drop by 6.6%.
Much bigger falls occurred for those earning their money from investing. Names such as Jacob Rothschild and his son Nathaniel, and John Duffield saw their collective wealth drop by 33.6% last year to £9.2bn, according to the Rich List.
Private equity and trading multi-millionaires also had a bad year, with their collective fortunes falling by 33% each.
Banking dynastic wealth, including names such as Bruno Schroder and Alexander Hoare, managed to keep their fortunes relatively intact – their wealth fell by only 12.5% last year.
Multi-millionaire investment bankers were not as hurt by the credit crunch as might have been expected given the collapse of Lehman Brothers and the contagion suffered by other investment banks. Their collective fortunes fell by 18.8%.
There were four billionaires in the financial services sector last year, compared with five the year before. Nevertheless, their fortunes have come under considerable pressure and the one not on the list this year – Michael Spencer of interdealer-broker Icap – saw his fortune collapse by £900m last year.
Financial News looks at the billionaire and multi-millionaire financial winners and losers in this year’s UK Rich List in more detail.
Banking
Dynastic banking families such as the Rothschilds, the Hoares and the Hambros have had a good recession so far, if such a term can be used. Although seeing their vast fortunes fall, according to the Rich List, they were not hurt as much as rich hedge fund managers and private equity multi-millionaires.
Beresford said: “When you have all your own wealth on the line in a partnership, it concentrates your mind about risk. No sub-prime gambles here, no arcane credit derivatives – just good old fashioned banking, where you love your customer nearly as much as your wife. It has worked for 300 years or so and will no doubt work for the next 300.”
The exception to this was the Fleming family, whose members saw their wealth drop from £1.9bn to £1.5bn last year. Their fortune is tied up with their multi-family office Fleming Family and Partners, which manages about £4.4bn of assets of the wealthy, with approximately 30% of Fleming family money, according to the Rich List.
Roddie Fleming, the family patriarch, has being selling off 700 acres of choice Oxfordshire farmland to cut his debt.
The Schroder family’s fortune remained at the same level as in 2007 – at £1.27bn, despite the share price of the investment manager in which the family has a substantial stake having a torrid time.
The Hoare family was perhaps the biggest beneficiary of the credit crunch, with its eponymous bank lapping up record levels of new assets from the wealthy, who were fearful of their money being tied up with wealth managers with links to troubled investment banking businesses. Their fortune fell only £10m to £235m.
Hedge funds
Multi-millionaire hedge fund managers in the UK have not done as badly as might have been expected by the fallout in the sector since the onset of the credit crunch. The collective wealth of those on The Sunday Times Rich List fell by 18.8% last year – steep, but not as bad as the financial sector as a whole.
This might indicate that those further down the food chain have been hit harder by the worst financial crisis since the Second World War. Seven hedge fund millionaires fell off the list this year. The king of the hedge fund millionaires in the UK – American Louis Bacon, who runs Moore Capital – saw his fortune drop by £100m to £650m. Moore Capital avoided the worst of the stock market crash last year, with its Moore Capital Investment fund down by just over 4%.
The Mayfair-based hedge fund also managed to pull off a big hiring coup by recruiting star hedge fund manager Greg Coffey. The Australian-born hedge fund manager was one of the winners in the financial services sector last year, according to the Sunday Times Rich List. His fortune is estimated to have risen by £80m to £200m.
Not such good luck for Coffey’s former colleague at GLG Partners Noam Gottesman, whose fortune was estimated to have fallen to £195m last year from £460m the year before, driven by GLG’s weak share price.
Other big name hedge fund millionaires hurt hard by the crisis included Roger Guy – asset manager at Gartmore – whose fortune dropped from £450m to £120m last year, according to the list.
The wealth of French financier Arap Busson was hit by the Bernard Madoff affair, with Busson’s EIM hedge fund having as much as $230m with the imprisoned American investor. His fortune fell to £105m from £250m in 2007, according to the Rich List.
Despite having a relatively good credit crunch, the fortune of Crispin Odey and his wife Nichola Pease fell nearly £100m last year to £204m.
Private equity
Big wealth in UK private equity took a dive last year, with the collective fortunes of those making their money from the sector falling by more than 33% – higher than the financial sector as a whole. But the fate of fortunes in the sector was mixed.
One of Britain’s best-known private equity multi-millionaires Sir Ronald Cohen saw his total wealth marked down by £40m last year to £220m by the Rich List. Cohen has taken a back seat in the mainstream world of private equity and now runs various businesses including Bridges Ventures, which invests in deprived areas.
Less fortunate was Guy Hands, founder of Terra Firma, who lost as much as £150m last year and now has an estimated fortune of £100m. Hands recently marked down his investments by more than 40% and has been gloomy about the prospects of the private equity world for some time.
Damon Buffini also had a tough year in 2008, with his personal fortune falling to £70m from £150m the year before. Permira, the private equity company he runs, has suffered. Last September three of its most high-profile investments were down between 56% and 78% in value.
Gordon Bonnyman, who heads Charterhouse Capital, had a torrid year, with his wealth falling from £140m to £50m.
Performing somewhat better was Alchemy Partners chief Jon Moulton who shed £33m of his personal fortune last year and now is estimated to be worth £102m, according to the Rich List.
Serial investor and financial commentator Luke Johnson lost £20m of his wealth – with his FishWorks restaurant chain going into administration not helping – and now is estimated to be worth £100m.
Investment
Billionaire and multi-millionaire investment gurus did not have a good year. Their collective wealth fell more than 33% as plummeting stock markets around the world dented fortunes. But even among the gloom some retained their Midas touch. For example, Jonathan Ruffer, the man behind one of the City’s most admired investment firms, saw his personal wealth rise last year.
Beresford said: “Some of the niche low-key players in the City have done well by not boasting about it – Stephen Butt and Jonathan Ruffer come to mind.”
High-profile losses in the investing world last year included Lord Rothschild and Nathaniel Rothschild, whose combined wealth more than halved to £690m.
Mark Coombs, the man behind investment group Ashmore, saw his fortune drop to £526m, from £970m in 2007, as his firm’s share price was hit by the credit crunch.
The Cayzer family’s Caledonia Investments avoided the worse pitfalls of the credit crunch due to the shrewd management of Peter Buckley, who died last December. Nevertheless, the Cayzers’ fortune fell from £690m to £450m.
John Duffield, who experienced the demise of his asset management firm New Star, saw his personal wealth fall £80m to £320m.
David Rowland and his son Jonathan fared better than many of the investing fraternity, with their wealth devalued to £630m from £700m in 2007. Moves to sell as many businesses as possible three years ago as the family feared an economic downturn reduced their exposure to the credit crunch.
Ruffer was the star performer in this sector last year, increasing his personal fortune by £3m to £112m.
The man who once said “there was not an ounce of entrepreneurial spirit in me” still owns about half of his eponymous investment company, which was worth about £200m last year, despite the tougher economic conditions.
Trading
Those who make their fortunes in trading saw their collective income fall by 33% last year, but there were mixed outcomes among the multi-millionaires in this sector. Peter Cruddas, the man behind the London-based financial trading group CMC, saw his fortune fall from £1.2bn a £1bn.
But Michael Spencer, who during the credit boom years was touted as one of the most successful financiers of his generation, lost £900m from his personal fortune last year to £430m, according to the Rich List. Spencer’s Icap business was hit hard by the stock market crash.
Other big losers in the sector included Michael Gooch, behind GFI Group, the New York-based brokerage. His fortune was estimated to have fallen to £166m, from £397m the year before.
Andrew Stewart, the co-founder of brokerage Collins Stewart, saw £40m lopped off his fortune last year and is now estimated to be worth £120m. Peter Hargreaves and Stephen Lansdown, the men behind the Bristol-based financial adviser and broker Hargreaves Lansdown, lost about £60m each. They were worth £310m and £280m respectively last year.
Insurance
The insurance sector was the safest one in financial services. The collective worth of the super-wealthy in this area saw their fortunes fall by 6.6% last year.
A few prospered from the downturn, with Henry Engelhardt, the man behind insurance company Admiral, seeing his personal fortune rise from £370m to £383m. The robust performance of Admiral’s share price underlined Engelhardt’s rising wealth.
Paul Newey, who is behind the loan and mortgage group Ocean Finance, dropped only £20m from his fortune last year and is now worth about £220m.
The relatively strong performance of esure, the insurance group best known for its Michael Winner TV advertisements, held the cut in the fortune of Peter Wood, its biggest individual shareholder, at £30m last year. Wood is now estimated to be worth £120m.
Investment banking
Investment banking fortunes have not been hit as hard by the credit crunch as many might have thought, with their collective wealth on the Rich List falling by just under 19% last year. Goldman Sachs bankers, or former ones, still dominate this category with eight of the 14 names making their fortunes from investment banking either working for the American bank, or having done so in the past.
American banker Bruce Wasserstein tops the list of super-wealthy investment bankers, with a fortune estimated at £500m – the same as in 2007.
Michael Sherwood, the first of the Goldman Sachs bankers to make it on the Rich List for investment bankers, saw his fortune fall by £80m last year to £120m. Sherwood’s personal wealth was hit by senior managers waiving their bonuses at the end of last year. He also contributed a substantial amount of his fortune to the Harefield Academy. Sherwood’s colleague Glenn Earle, chief operating officer for Goldman Sachs in Europe, was also hit by the difficulties at the investment bank, with his fortune falling to £80m, from £137m in 2007.
Bob Diamond, Barclays president, has seen his estimated personal wealth fall by £10m to £75m last year, according to the list.
Louis Bacon 
Guy Hands 
Michael Sherwood
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