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85 billion shades of Gray

The richest man in South Africa.

Who’s the richest man in South Africa?

If you thought it was one of the usual suspects of either Nicky Oppenheimer, Johann Rupert, Christo Wiese, Koos Bekker or even Patrice Motsepe, you would be wrong—and by a long shot.

The richest man in South Africa, according to the international business magazine Ventures, is none other than the elusive and media-shy Allan Gray (yes, there is someone called Allan Gray) who leads the wealth-pack in South Africa with an estimated net worth of $8.5 billion (R85 billion).

I have long thought that Gray was up there amongst the super-wealthy but this news came as a surprise to even me, probably for the same reason most others would have had: very little is ever written about the person behind one of the most successful financial institutions in the country.

Many investors are surprised when they learn there is a person called Allan Gray whose Cape-Town-based company bears his name. Very few photographs of him exist and he doesn’t give press interviews.

The focus of media attention is normally concentrated on the investment firm Allan Gray, which manages about R300 billion of local retail and institutional business on behalf of millions of clients.

And then there is the balance of R200 billion managed by Orbis, an asset management company based in Bermuda, where Gray and his family now resides, although he has kept his South African citizenship.

Gray (75), was born in East-London and after the graduated with an MBA from Harvard spent eight years at Fidelity Fund Management and Research in Boston before returning to Cape Town in 1973, when he founded Allan Gray Limited.

This company is now the largest privately-owned asset management business in South Africa.

The rise of the company

Allan Gray initially focused on institutional business, at one time running pension funds for many of SA’s top corporates, including the Rembrandt Group, and only launched its retail funds at the end of 1998.

The growth since then has been astonishing. Known for taking a contrarian view at times Allan Gray vastly outperformed the other, much larger funds of the life assurance industry in the early 2000s, drawing in billions from the retail investment industry.

What made this success story even more remarkable was that this was done without a sales force, relying solely on independent financial advisers to recommend one or more of the firm’s funds to their clients. That… and some very smart advertising.

There cannot be many people in South Africa who have not seen an Allan Gray television advert, always in black and white, never in colour.

Keys to the firm’s success included its rigorous research and a consistent application of Gray’s firm belief to invest heavily into companies whose shares prices are less than their intrinsic value.

Gray is also the founder of Orbis, an asset manager with its headquarters in Bermuda which he founded in 1989. Today the firm manages $21 billion and is run by his son William.

Many local investors who use the asset swap capabilities of Allan Gray, like the AG Global Equity Fund, for instance, will have their funds managed by Orbis, as the firm does not use any outside fund managers within its range of global equity funds.

In 2007 Gray set op the Allan Gray Foundation with seed capital of $130 million which was the single largest charity gift in South Africa at the time. The foundation funds scholarships for the poor but promising South African high school students.

Richest man in Africa

So who is the richest man in Africa? This honour belongs to Nigerian Aliko Dangote, owner of the Dangote Group, and worth an estimated $20.1 billion.

Fifth on the list is Nicky Oppenheimer who is worth “only” $6.5 billion,followed by Johann Rupert on $6.1 billion (plus 200 motor cars at his L’Ormarin motor museum), Nathan (Naty) Kirsh at $3.6 billion with Christo Wiese at number ten with an estimated worth of $3.4 billion.

And what about the ladies? Coming in at number 4 there is Folorunsho Alakija from Nigeria worth $7.3 billion, mainly from fashion, oil and a massive property portfolio worth $200 million in the heart of London.

*Magnus Heystek is a director at investment firm Brenthurst Wealth. He can be reached at magnus@brenthurstwealth.co.za for ideas and suggestions.

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