Monday, March 14, 2016

How the really rich view the world

Gerald Grosvenor, the 6th Duke of Westminster is Britain’s wealthiest man. The Grosvenor Group has three arms: the property and fund management business; an industrial division made up of food and energy investments; and the family office, comprising an art collection of old masters from Velasquez to Stubbs and Rembrandt. He owns four rural estates including the family home Eaton Hall in Cheshire, a 10,000-acre plot dating back to the 1440s.

The duke’s company has survived 30 downturns in 340 years and now has £11.4bn assets under management and made £80.1m in revenue profit (the combined total of rents, sales, investment returns and trading) in 2014. It recorded a profit before tax of £681.8m (which includes the market valuation of its assets), up from £506.9m in 2013. It now has offices in 60 different cities. Last month Grosvenor committed $30m (£20.6m) to a $200m fund run by RMB Westport to invest in shopping centres, office buildings and industrial assets, primarily in Nigeria, Ghana, Angola and the Ivory Coast, over the next eight years. “It’s an interesting time to get in on the ground and the raw materials there mean people will prosper in the long term,”  Mark Preston, the new executive trustee of the Grosvenor Groupy says.  Grosvenor is not planning to open its own business there, but rather make a small investment through third party RMB Westport, and watch it grow. African farming may be the next target. 

Preston explains part of their economic strategy, “My own rationalisation is that the great advantage of China is that it is a centrally planned economy which from a property planning point of view means there is a degree of certainty to what will be built where. In India you get the delightful chaos of democracy, with no idea what will change in planning terms from one month to the next.” China’s economy has been slowing since 2010, sending jitters throughout the world markets, but this is not a concern for Preston. “Yes these are difficult times, but that could present a buying opportunity for us. If there is very strong growth and crazy deals then we’re priced out of the market and will have to sit on our hands. However severe dips and corrections in the market, that’s our time. It’s the classic emerging markets story – rapid growth, collapse, rapid growth, collapse.” Longevity underpins every move Grosvenor makes: “Despite its [China’s] slowdown the long term growth trend is a good deal better than we are going to get in Europe. In 100 to 150 years’ time we need to be in China to reap the rewards,” he says.

Regards the EU referendum he observes, “We absolutely should not be having a referendum, it shows an extraordinary lack of spine on behalf of our politicians. We vote in our leaders to be ideologically convinced and we’re risking instability – like they did with Scotland which was equally idiotic – asking for an emotional vote based on the news the week before.”  Frustrated with both the In and Out campaign that are giving extreme scenarios, Preston believes the reality is far more nuanced. “The world will not come to the end if we come out nor ghastly if we stay in…It’s the uncertainty that will cause the most damage.”

1 comment:

Anonymous said...

A pragmatic, clear-sighted capitalist with a ready eye on the main chance.If I may be allowed to quote Trotsky, 'The Bourgeoisie...far surpasses the proletariat in the completeness and irreconcilability of its class- consciousness...'If only the working class were as ruthless!