They are often known as the ‘one percenters’ or the one percent of the world population who hold the majority of wealth in the world. Gone are the days when the Queen used to be the richest in the Sunday Times Rich List, she has now been replaced by the residents of Kensington Palace Gardens, better known as ‘Billionaires Row’ –otherwise known as the place where all the rich and famous live. Royalty is no longer the gold standard when it comes to wealth and that is due to the emergence of people who have been able to turn their ideas into money and in the process found their way into the richest one percent. However, vast amounts of cash are required in order to sustain growth targets and you can hardly expect the billionaire owner of the business to pump in his own cash to achieve that. They need funding from outside to fuel their business’ surge and that’s why they need your money to further grow their empires. As world renowned Oxford economist, wealth advisor and consultant to the super rich of the world Sam Wilkin says in his book Wealth Secrets of the One Percent one of the most important wealth secrets of the super-rich is that they know how to take risks with other people’s money.
Below is a list with four billionaires who used other people’s money to grow their empires. Hopefully you’ll get an idea or two to start working on your first billion.
1. Tony Bloom
You won’t usually expect professional gamblers to become billionaires, but then again not everyone is Tony Bloom, also known as ‘The Lizard’ among sports gamblers due to his ability to stay perfectly cool at poker tables when the stakes are high. As you might have guessed, he is not someone who made his money by slaving away at poker tables and gambling on sports events. Bloom, a math graduate from the University of Manchester, worked for bookmakers and then built his own bookmaking operation called Premierbet, which he sold ten years ago. But that’s not all this fellow has done in his life, the operation that has made him rich beyond any gambler’s dreams is his company Star Lizard that takes in a minimum investment of £2 million in order to gamble on soccer games. Bloom’s company takes a cut of the proceeds, and this strategy of bringing capitalism into sports gambling is what has made him into the billionaire that he is. He also owns the Brighton and Hove Albion FC football club and he continues to grow his fortune by literally gambling with his clients’ money. According to some estimates, Bloom is currently worth $1.52 billion.
2. George Soros
Soros Fund Management is quite literally the king of hedge funds after having turned the biggest profits among hedge funds in history. Its creator George Soros, currently worth $24.2 billion showed the world how it is possible to use others’ money to build a wildly rich empire. Soros worked in investment banks for many years before he started off on his own in 1970 when he established the Soros Management Fund. The self-made billionaire had managed to take the total assets under management to $30 billion by the time he stepped down in 2011. He is one man who knows how to use other people’s money to become rich, but he is kind enough to make sure that his investors reap the rewards as well.
3. Donald Trump
Well, Donald Trump has not been added here merely because he is the flavour of the season, but simply because of the fact that even though he inherited a real estate empire from his father he still had to be bailed out in order to keep hold of his wealth. He’s had to file for bankruptcy four times, but he has been able to get through the ordeals with the help of canny accountants and shall we say, generous banks who deemed him to be ‘too big to fail’. According to Forbes, he is worth $4 billion but back in 1990 he was bailed out by a consortium of four banks (Bankers Trust, Citi, Chase Manhattan and Manufacturers Hanover) in a $65 million deal that put him back on his feet. If that bail out hadn’t been handed out, then Trump would certainly not be running for President today.
4. Dhirubhai Ambani
Indian businessman Dhirubhai Ambani laid the foundations for one of the largest companies in the world -Reliance Industries Limited- back in 1958. At a time when the capital markets in India were largely untapped, he changed the game. He came into the Indian business landscape like a storm that knew the potential of the capital markets and he aggressively sought investment in order to fuel his dream of forming India’s largest company. Back then, India was a nascent country. Having only freed itself from British rule in 1947, India had protectionist economy that did not encourage entrepreneurship and the stock markets were controlled by a few established businessmen. Ambani started off by going to his village in the state of Gujarat in India and cajoled a total of 58,000 people to invest whatever they could in his polyester textile venture. The wild success of the business did not only bring riches to the investors, but it also made Reliance a big name in Indian industry and before long he initiated an initial public offer of 2.8 million shares. Everyone who invested in his company became prosperous and rich; while Reliance shares are among the most coveted investments for retail investors in India. By 2002, Reliance had branched out into petroleum, mining and telecommunications under the stewardship of Ambani’s two sons. Last year the company generated revenues worth $62 billion and there is absolutely no doubt that the dynasty started by Ambani has grown with the help of business sense, as well as generous contribution from investors, beyond its founder’s wildest dreams. Not too bad for a man who never even finished high school.
Although it is true that ever since the financial collapse of 2008 billionaires have been looked upon with suspicious eyes since they seem to get the better part of the rewards of playing with other people’s money while foregoing any responsibility for failing to make a return on their investments, it needs to be remembered that businesses have always operated in that way. The actions of a few irresponsible banks should not be the yardstick with which one should judge serious businessmen who have a keen eye for the next big thing.
If you find the right billionaire to invest in, then you could end up making a substantial amount of money for yourself. Just ask Warren Buffett or the slew of retail investors who have been able to make it big by pledging their wallets in the hands of entrepreneurs with promise. Billionaires might well be growing their empires by fuelling their latest ventures and gambles with other peoples’ money but when those ventures and gambles pay off then the people who pledge their wallets also stand to gain in proportion to their investments. It is a two way street but most of the ‘one percenters’ have over the years build and expanded their empires with other people’s money.