Published On: Mon, Sep 21st, 2015

In 2014, Glencore’s Ivan Glasenberg was SA’s richest man. But a year is a long time

The past year has punctured both his wealth and veneer of invulnerability; he’ll be hoping his judgment doesn’t come under similar scrutiny

 

Ivan Glasenberg / Getty

 

Don’t tell Prof Thomas Piketty, but it’s apparently quite tough being a billionaire nowadays. The top 200 billionaires, a list headed by Microsoft founder Bill Gates (net worth $78-billion), have shed $36-billion of their combined wealth this year alone. Perhaps the hardest-hit of the ultra-wealthy has been a 58-year-old workaholic who grew up in Johannesburg’s Illovo suburb, who last year emerged top of the heap of the wealthiest South Africans: Glencore CEO Ivan Glasenberg.

Around this time last year, Glasenberg’s personal 8.4% stake in the commodities trading giant put his fortune at nearly R70-billion.

But a year is a long time in the commodities business. Glencore’s stock has plunged 60% in that time, which means that today Glasenberg’s fortune is worth R29.9-billion.

In an acutely observed article this week on Glasenberg’s woes, the Daily Mail dubbed this “one of the fastest destructions of private wealth by any individual in the history of capitalism”.

Not only has Glasenberg slid out of the Bloomberg Billionaires top 200 list, he doesn’t even rank among the top three wealthiest South Africans.

Today, that honour belongs to Christo Wiese (182nd on that list with $7-billion), Johan Rupert (190th with $6.8-billion), and Nicky Oppenheimer (193rd with $6.7-billion).

On the Forbes rich list, Glasenberg has fallen to 781st, worth just $2.4-billion. In 2012, he was 125th, with over $7.3-billion.

So does this mean anything?

Well, you’d have to be particularly blasé to brush off a R40-billion drop in wealth, but Glasenberg (and his investors) will be hoping his radical recovery plan, unveiled last week, will stem the bleeding.

Under pressure from shareholders to slash Glencore’s debt, Glasenberg agreed to various measures — including raising $2.5-billion in new equity, suspending the dividend and selling assets worth $2-billion.

“After listening to shareholders, we decided to make our balance sheet bulletproof, ” he explained to investors. The balance sheet, he said, was now “pitched for Armageddon”.

The fact that Glasenberg, once bulletproof himself, bowed to the demands of shareholders when it seemed clear he didn’t agree attests to the shifting power dynamic that is inevitable at a company under strain.

To finance the equity issue, Glasenberg will have to fork out $210-million of his own money, further reducing his net worth.

Still, it doesn’t seem likely that Glasenberg’s fall to the billionaire cheap seats will do anything to disrupt his apparent belief in the linear connection between work and wealth.

Famously, when asked by The Wall Street Journal in 2013 if he believed in that quaint notion of “work/life balance”, Glasenberg scoffed. “No. We work. You don’t come here to take life easy. And we all got rich from it, so, you know, there’s a benefit, ” he said.

It’s an ethic that those who know him say permeates every facet of his life. He still rises at 5am for a run or a swim before hitting the office at 7am, ahead of a minimum 12-hour day.

This is because, if you take your foot off the pedal — watch out. “I see it happening. Some guy suddenly decides: ‘I want to take it easier, I want to spend more time with my family’ … an attack (from an executive below) will come, ” he said.

So if Glasenberg is an adherent of this sort of brutal corporate Darwinism, what happens if he starts showing signs of weakness? What happens, for example, if it turns out Glencore’s plan isn’t bold enough?

Glasenberg clearly thinks it is, saying he doesn’t believe commodity prices will stay this low for a “sustained period”. The market seems to think otherwise: as the Financial Mail went to print, Glencore’s stock tumbled to near its record low, almost wiping out the gains made since last week’s action plan.

The past year has punctured both Glasenberg’s wealth and his veneer of invulnerability; he’ll be hoping his judgment doesn’t come under similar scrutiny.

This article first appeared in the Financial Mail

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