Super-rich sent flying
These days, Malcolm Isaac is a rarity. The 80-year-old Hampshire farmer pocketed over £40m (€50m) in July from the sale of his Vitacress salad business to Portugal’s Grupo RAR.
He is among the few British-based entrepreneurs who have managed to sell a company in the past year as the credit crunch has evolved into a fullblown financial crisis. In 2006 there was on average one business sale each week in the UK that netted the owner upwards of £20m.
Now these so-called liquidity events are increasingly rare, as is the case across much of Europe. At the same time, profits at many private companies are tumbling leaving owners unable to pay themselves hefty dividends or salaries.
At listed companies, fortunes based on shareholdings have been decimated. It leaves the ranks of the British super-wealthy looking severely depleted. One in five of the UK-based millionaires on this year’s Sunday Times Rich List look likely to disappear from next year’s ranking, and officially the economy has yet to enter a recession.
CARNAGE
There are, however, pockets of prosperity. For all the carnage wrought in capital markets and among investment banks, in particular, there will continue to be some incredibly well-paid individuals in London’s hedge fund community.
They may be far less numerous than in recent years – and barriers to entry in terms of intellect and skill will be set much higher – but the likes of Crispin Odey of Odey Asset Management (who earned £28m last year) and Stephen Butt of Silchester International (£25m) will not be altering their lifestyles as a result of the financial markets crisis.
In Aberdeen, Scotland, the high price of oil has created a band of local millionaires. A Wealth Bulletin analysis this year identifi ed the area around the so-called Granite City as having the highest ratio of millionaires to the general population of anywhere in the UK outside London’s Mayfair and Chelsea districts.
The 50 or so millionaires locally include billionaire Sir Ian Wood, chairman of engineering company Wood Group and Scotland’s richest man, and Larry Kinch, founder of Petroleum Engineering Services who is worth more than £100m. If the price of oil remains high, local wealth should continue to grow.
In the UK’s midlands and northern regions property magnates who emerged in recent years have taken a battering with flagship projects frozen and building sites mothballed.
Ironically, the remnants of the country’s heavy industries may prove more resilient. Langley Holdings, based in Nottinghamshire, has reported orders at unprecedented levels thanks to demand for its engineering services from emerging markets including China.
Tony Langley has resurrected his grandfather’s company over the past 30 years, creating a diverse engineering business with 25 subsidiaries and products ranging from cement cooling machines to dockside cranes. The wholly-owned family business is valued at £180m. Scrap and waste management is another sector in which fortunes continue to be made.
In Doncaster, Yorkshire, Prosper de Mulder has evolved from the UK’s largest meat renderer to a food recycling business that collects and process more than a million tons of waste a year. Its profits more than doubled last year to £10.9m and the De Mulder family owns all the company, valued at £80m.
There are at least four more Yorkshire-based recycling millionaires who appear to be largely unaffected by the economic crisis.
In Liverpool, Philip Sheppard is on track to becoming Britain’s first scrap billionaire. His European Metal Recycling business saw profits soar to £104m from £56m last year, with turnover a record £1.7bn.
The business handles more than half the two million cars scrapped in Britain each year, putting one through its shredders every 30 seconds. Sheppard is moving into plastics recycling, going head-to-head with local rival Norton Plastics, a £90m company owned by John Harry and his family.
TECH WINNERS
Further south, there continue to big winners in technology. Robbie Cowling, a former motor mechanic based in Essex, delivered £11.7m in profits last year from his online recruitment business, Jobserve, while Jagex, a Cambridge-based online games business behind the successful RuneScape game, made £15m in profits, valuing the stakes of its founders, brothers Andrew and Paul Gower, at a combined £100m and rising.
Of course, the problem is that there aren’t enough Gowers, Cowlings or Sheppards to maintain the recent velocity of growth in the ranks of Britain’s super-rich. The service providers that cater for the newly wealthy – from wealth managers to concierges, property finders, luxury car dealers and handbag retailers – are likely to feel the pinch.
Philip Beresford compiles The Sunday Times Rich List
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