Billionaire wealth in Asia set to surpass that in the US in five to 10 years
With an average age of 57, Asian billionaires are younger than their global peers
Asia accounts for 36% of self-made billionaire wealth, outstripping Europe for the first time
20% of Asia's self-made billionaires are in the consumer sector
China produced a new billionaire almost every week in first quarter of 2015
Hong Kong, 26 May 2015 - UBS and PwC today launched the 2015 Billionaires Report, "Billionaires: Master architects of great wealth and lasting legacies". Key findings attribute entrepreneurship as a strong driver of wealth creation globally and indicate that, increasingly, billionaires are turning to philanthropy to establish a legacy. The analysis encompasses data for 1,300 billionaires spanning 19 years across the 14 largest billionaire markets, which account for 75% of global billionaire wealth. Additionally, UBS and PwC conducted face-to-face interviews with more than 30 billionaires.
Data for the past five years shows a shift in value creation from the US to Asia, and in particular, to China.
"As Asian billionaire families grow in size and complexity, succession planning and the engagement of the second generation have become increasingly important components in establishing a lasting family legacy. Ultra high net worth clients are becoming more and more sophisticated and, increasingly, exhibit institutional-like needs. To cater to them, UBS harnesses the expertise of not only its Wealth Management business but also that of the Investment Bank and Global Asset Management to provide clients with comprehensive and holistic solutions." Francis Liu, Regional Market Manager, UHNW Greater China, UBS Wealth Management said.
"Asia's billionaires make up 36% of self-made billionaire wealth, overtaking Europe for the first time and second only to the US. Looking forward, we expect the region to be the center of new billionaire wealth creation. If anybody has any doubt, look no further than the fact that one new billionaire was created almost every week in China in the first quarter," says Antoinette Hoon, Private Banking Advisory Services Partner, PwC Hong Kong.
WEALTH CREATION The Billionaires Report found that between 1995 and 2014, 917 self-made billionaires generated more than $3.6 trillion of wealth globally. Many started young, with 23% launching their first business venture before the age of 30 and 68% before turning 40.
In the U.S., technology produced the second highest number of self-made billionaires (27.3%) in the last two decades. The financial services sector produced 30% although financier billionaires are less wealthy than their counterparts in the technology sector, with an average worth of $4.5 billion compared to $7.8 billion in the tech sector.
By contrast, over the past two decades, self-made billionaires in Europe and Asia were largely created by the consumer industry and have an average wealth of $5.7 billion. The second wealthiest group are entrepreneurs in the technology sector, which make up around 9.7% of the population and are, on average, worth $3.8 billion.
Nearly 20% of self-made billionaires in Asia come from the consumer industry, with an average wealth of $3.2 billion. The real estate sector produced the second-highest number of self-made billionaires (12.9%), with an average wealth of $2.7 billion.
In Asia, the average age of billionaires is 57, 10 years younger than in the U.S. and Europe. Around 25% of Asian billionaires grew up in poverty compared to 8% in the U.S. and 6% in Europe.
WEALTH PRESERVATION More than two-thirds of global billionaires are more than 60 years old and have more than one child, making wealth preservation, wealth transfer and legacy especially important to them.
The Report found that 60% of self-made billionaires in the US and Europe retain their businesses, 30% dispose of part of their business via an IPO or trade sale, with 10% selling outright.
In Europe and Asia, billionaires are most likely to create a business dynasty, with 57% of European and 56% of Asian billionaire families, respectively, taking over the family business when the founder retires. In the U.S., just 36% of businesses remain family-run once the founder retires.
LEGACY AND PHILANTHROPY Today's billionaires are increasingly focused on philanthropy. In particular, they seek measurable results for their philanthropic efforts and wish to: know how many lives have been affected by their projects; have evidence of enhanced health or living conditions; finance directly via micro-lending.
In the U.S., "visible philanthropy," donated through institutions is popular. Since its inception, in excess of 100 U.S. billionaires have joined Founder of Microsoft, Bill Gates’ "Giving Pledge," agreeing to donate more than 50% of their wealth.
About the UBS-PwC Billionaires Report A number of sources were utilized to research and profile the characteristics of wealthy individuals. These were blended into a mosaic analytical framework from which we conducted extensive modeling and analysis. This information and data is part of PwC proprietary data and analytics structures and are non-commercial in nature and specifically non attributable regarding the identity of any underlying individual or family. PwC acts as a supplier of data and analysis for the purpose of this report. In addition the following were specifically leveraged as a part of our research:
PwC has a significant body of research drawn from publishing studies on Wealth and Private Banking, and Family Businesses including current and future perspectives on a number of industries from which we were able to derive insights. These include The Global Private Banking and Wealth Management Survey (2013, 2011, 2009), and the Asset Management 2020, A Brave New World (2014), and Family Business Survey: Up Close and Professional (2014)
For the long-term time series (1900 to 2013) of wealth and income we used the "The World Top Incomes Database" (Facundo Alvaredo, Tony Atkinson, Thomas Piketty and Emmanuel Saez) (accessed on 12/2014).
Other analysis is based on our proprietary PwC databases which covers non client specific detailed bottom-up data on more than 1,300 billionaires from the US, Germany, UK, France, Switzerland, Turkey, Italy, Spain, China, India, Hong Kong, Japan, Singapore, Russia. This is a private non-commercial data structure designed to support analysis of specific market segments.
Specific interviews with more than thirty billionaires in various geographies were conducted exclusively by PwC and the information from those qualitative discussions were incorporated on a non-attributable basis without regard to any business / client relationship with any person, firm or organization.