Welcome to Family Capital’s Investor of the Year Award. During 2015, Family Capital looks at the entrepreneurs and family investors making deals, particularly ones that stand out and are likely to make a difference in the longer term.
This year has been a big one for acquisitions, making the choice that much harder. Up until the beginning of November, global merger and acquisition activity reached a massive $3.37 trillion in deals. If the last two months of the year generate another $300 billion, which most experts say is likely, 2015 will be the best ever on record for M&A activity. Whether that makes any difference to the world economy is debatable, but some deals being made just may make some difference in the future.
For the inaugural award, Family Capital considered more than 500 deals - acquisitions and initial public offerings - led by entrepreneurs and families. This year, despite considerable competition, there was one clear winner.
Family Capital has also listed eight other notable dealmakers in 2015.
Family Capital Investor of the Year: John Elkann
John Elkann and his Turin based investment group Exor did a number of deals in 2015 that stood out from a crowded field. Here’s why -
The sale of Cushman & Wakefield. The sale of the property services group netted Exor around $700 million and helped the group, controlled by the Agnelli family and led by the fifth generation Elkann, finance one of its biggest deal ever - the acquisition of PartnerRe.
The PartnerRe deal. The acquisition (the deal will be finalised early next year) of the Bermuda reinsurer for $6.9 billion gives Exor a foothold into the potentially lucrative insurance world. The world’s best known investor Warren Buffett has always liked buying insurance companies because premiums are paid up front and claims are often paid much later - that frees up cash to do other deals. Buffett calls this cash “floats”, and has used these floats to do other deals. Exor looks to be thinking along the same lines, and some are saying the investment group is fast becoming Europe’s Berkshire Hathaway - Buffett’s legendary investment group.
The Economist deal. Exor became in August the anchor investor in the London-based Economist Group, which includes ownership of arguably the world’s most respected weekly news magazine, The Economist. Exor increased its holding of the group to 43.4% from 4.7% in a deal worth around €400 million. It’s not likely to be a big money spinner for Exor, but The Economist is a very prestigious asset to own.
The Ferrari IPO. To top off an extraordinary year of deals for Exor, Elkann and his righthand man Sergio Marchionne, the CEO of Fiat Chrysler Automobiles, the listing of the world’s most famous sports car brand in late October was a huge success, being 20 times oversubscribed. Exor’s holdings in Ferrari are worth between €2 billion and €3 billion, and the Agnelli family will remain the biggest shareholder of the car maker even after the IPO, which listed just 9% of the shares. Most commentators saw the biggest winners from one of the most successful IPOs of the year were the Agnelli family.
Other notable deal-makers
The family-controlled Marriott hotel group bought the Starwood Hotels and Resorts group for $12.2 billion in November. The deal has created the biggest hotel group in the world in terms of revenues. Bill Marriott, Marriott International’s executive chairman, is one of America’s best known business chiefs, and the Starwood deal was among his most audacious acquisitions in his many years running Marriott. Not bad for an 83 year-old...
Italians are doing deals, and with his compatriot John Elkann, Pessina is among the country’s biggest deal makers. This year, the Monaco-based investor, through his leadership of the pharmacy chain Walgreens Boots Alliance, bought Rite Aid for $17.2 billion. The acquisition is all part of Pessina’s ambition to build the world’s biggest drugstore group.
No year goes by without Warren Buffett’s investment group Berkshire Hathaway buying a business and 2015 was to mark one of its biggest acquisitions to date - the $37.2 billion takeover of the Oregon-based Precision Castparts. The Sage of Omaha’s move to buy Precision shows his faith in American manufacturing, despite fierce global competition. But his acquisitions so often turn out to be right in the long term.
Yes, no one has heard of Guo Guangchang, except those who’ve been at the sharp end of his deal-making skills, but increasingly he's building a big reputation. Guo is chairman of the Chinese investment group, Fosun Group, which is doing some interesting things, including this year buying an insurance company in Israel, purchasing top-end property around the world and entering into a joint venture with UK holiday group Thomas Cook to develop tourism in China. The billionaire says he’s an avid student of the acquisition strategy of Buffett. Watch this space.
Dell’s deal to buy the data storage and information security company EMC hit the headlines in October because of the amount paid - a staggering $67 billion - making it the biggest ever takeover in the technology sector. The deal was financed by Dell’s family office, MSD Capital. Dell is betting on the rising demand for data storage and computer security - most indicators suggest he’s right to be making that bet.
A controversial choice, but Drahi has emerged as one of Europe’s biggest deal makers. The French investor’s acquisition of Cablevision for $17.7 billion earlier this year very much placed him on the top table of investors. Nevertheless, he finances most of his deals with a high level of debt, which often puts him at odds with other businesses and governments. Lets hope for his sake interest rates stay low.
Few people outside of Poland have heard of Sebastian Kulczyk, but the Polish national is about to become one of the biggest beneficiaries of the acquisition of the brewery group SABMIller by Anheuser-Busch InBev. With the sale some years ago of a Polish brewery for shares in SABMiller by Sebastian’s father, who died suddenly this year, Kulczyk stands to make $3 billion in cash. OK, Sebastian, 33, is an unproven force in the world of investing, but he has a sizeable chunk of money to start proving his mettle.
Is there something weird going on with this list - three Italian names on it out of eight? No - a number of Italian investors, led by John Elkann, had a great year in 2015, and the Pesenti family was no exception. The family own 45% of one of the biggest cement producers in the world, Italcementi, which just became even bigger when the German HeidelbergCement took a 45% stake in the group earlier this year. The Pesenti family was the biggest beneficiary of the deal.