HomeSpecializationsEntrepreneursShipping Billionaires Race To Invest Pandemic-Era Fortunes

Shipping Billionaires Race To Invest Pandemic-Era Fortunes

Many of the fortunes forged during the pandemic have long since crumbled. Yet a $95 billion boom among a small group of wealthy shipping tycoons has prevailed, spurring a mad dash to invest and diversify even as they face a comeuppance.

Perhaps no story better illustrates this heady era of feverish demand, squeezed supply lines and soaring rates than Yildirim Holding AS. The under-the-radar Turkish company has more than tripled in value over the past three years, making the family behind it billionaires many times over and fueling ever-lofty ambitions.

Led by Robert Yuksel Yildirim, 61, the family has made a fortune from some of the least glamorous niches of industry, from trading coal with Russia to mining chrome in Kazakhstan and ferronickel in Kosovo. Now they’re preparing to spend $10 billion—more than the estimated value of their current business—to push into solar farms, U.S. fertilizer plants and other areas. The funds for this audacious plan spring from an unexpected windfall generated by the deal of a lifetime: a bet in 2010 on a struggling container line that’s returned more than 800%.

It’s left the Yildirims awash in cash—but also conflict. An aggrieved relative’s lawsuit over the company’s true value has laid bare the pressure and consequences of an extraordinary and astonishingly lucrative few years for shipping. The combined net worth of the industry’s ten wealthiest tycoons is $155 billion, according to the Bloomberg Billionaires Index, up from about $60 billion in early 2020.

The low-profile family dynasties of marine transport are now racing to deploy this bounty, both to cement their grip on an industry in flux and diversify their concentrated fortunes—but the path to make these seismic changes is narrowing by the day.

Container rates, or the amount shipowners can charge to ferry goods across the ocean, have tumbled 77% in the past year after soaring during the pandemic. Global rules limiting ships’ carbon output are quickly coming into effect, requiring expensive upgrades and diminishing margins just as cargo rates fall. The war in Ukraine and ongoing threats from rogue nations and criminal gangs have only added pressure.

For the Yildirims, then, time is of the essence to take aggressive action. Among the other billionaire dynasties making such moves is France’s Saade family, which leads CMA CGM—the very maritime giant that turbocharged the Yildirims’ fortunes.

Brink of Disaster

Some 14 years ago, CMA CGM stood on the brink of disaster. The French containership group, then led by founder Jacques Saade, was the victim of a prolonged slump in the notoriously cyclical shipping industry and was forced to renegotiate debt and seek new capital.

Robert Yildirim, the chief executive officer of his family’s second-generation industrial group, came to the rescue. Using a unit of the family company, he steered $500 million to CMA CGM, taking the equivalent of a 20% stake. That position, raised to 24% a few years later, is set to pay out $600 million in dividends based on last year’s results alone.

It’s now Yildirim Holding’s biggest asset by far and has boosted the Turkish company’s value to $6.7 billion, according to the Bloomberg wealth index, which is estimating the family’s net worth for the first time. The ownership is split equally between the CEO and his brother, Chairman Ali Riza Yildirim.

The CMA CGM wager is now the foundation for Yildirim’s global ambitions. It already owns two dozen port terminals, is ranked the world’s second-biggest producer of high-carbon ferrochrome, is one of the largest chrome ore miners, and has businesses spanning 56 countries. Its $10 billion investment plan involves digging deeper into the maritime trade and expanding further afield, with ammonia and urea plants in the U.S. and solar plants in Albania, Croatia, El Salvador, Kosovo and Turkey.

Robert Yildirim also intends to grow the group’s port unit, which is already one of the world’s largest container terminal operators. “We want to be one of the largest fruit shipping port operators in the U.S.,” he said in an interview in March. U.S. Department of Agriculture statistics show the U.S. imported 14.1 million metric tons of fresh and frozen fruit last year—a haul worth $19.3 billion.

‘Less Drastic’

Over the past six years he also invested $70 million in Turkish football club Samsunspor, buying out the minority shareholders. The team is set to win this year’s second division trophy, qualifying it for the country’s top league next season.

Families who diversify “tend to hold onto the wealth that was created, with less risk of drastic changes,” said Ken Eyler, CEO of Aquilance, an adviser to single and multi-family offices.

Bold moves like Yildirim’s are being replicated by shipping billionaires everywhere.

Some aim to cement their control of the logistics cycle. This week Rodolphe Saade, CEO of CMA CGM and son of Jacques, agreed to buy the transportation and logistics business of fellow French billionaire Vincent Bollore at a $5.5 billion valuation. The Apontes, Saade’s Italian rivals and owners of maritime colossus Mediterranean Shipping Co., shelled out $5.3 billion for Bollore’s sprawling port network in Africa last year.

These tycoons are also taking to the skies: German billionaire Klaus-Michael Kuehne boosted his stake in airline Deutsche Lufthansa AG in September, the Saades bought 9% of Air France-KLM and Aponte’s MSC was briefly in the running to acquire the successor to Alitalia.

Early Years

Even before the pandemic ushered in the current wealth boom, Robert Yildirim had always shown a proclivity for diversification.

The middle son of a construction-materials trader, Yildirim earned a master’s degree in mechanical engineering from Oregon State. His parents agreed to let him study in the U.S. to learn English, provided he return to Turkey after three years, according to a 2018 interview in Oregon State Engineering Alumni Magazine. But he ended up staying in the U.S. for longer, adopting the first name “Robert” and taking a job at a division of Mitsui Corp. in California that designed cranes for ports.

Yildirim joined his father’s business five years later in the early 1990s, when it had only 15 employees, and quickly struck a deal to import coal from Russia.

But it was about two decades ago when he had his first brush with seizing opportunity in crisis.

In 2004, Yildirim and his brothers snapped up a local bankrupt chromium miner and fertilizer maker. Both had gone under amid Turkey’s catastrophic debt crisis of 2001, which sent inflation spiking, exploded budget deficits, and saw a sudden exodus of foreign money, necessitating an International Monetary Fund bailout. They ultimately revived both businesses.

“I always took on the challenge of doing difficult things that had the potential of providing a better return,” Yildirim said in the magazine interview.

Nearly Sold

It was through the ports business that Yildirim became acquainted with CMA CGM. In the wake of the 2008 global financial crisis, Yildirim offered them a lifeline after the French shipper had already seen two other potential investors, a group from Qatar and the late Belgian billionaire Albert Frere, fail to materialize. Jacques Saade acknowledged after the deal, which earned the Turkish company three of 10 board seats, that there were synergies given they were both family businesses.

“Yuksel values relationships,” said Scott Ashford, dean of Oregon State’s engineering school, who’s known Yildirim for a decade. He said the Turkish entrepreneur takes time to forge connections and has a strategic mindset. “He always seems to be asking himself, ‘what’s my competitive advantage’?”

Twice the Yildirims came close to selling their CMA CGM stake—once in 2015 and again in 2017, when they were considering buying U.S. terminal operator Ports America Holdings Inc.

Hanging on has paid off in a big way. Since early 2020, CMA CGM’s dividend payout has totaled more than $4.9 billion, according to its financial statements. Almost a quarter of that has flowed to the Yildirims.

And now everyone is coming for their cut.

Family Feud

Robert Yuksel’s and Ali Riza’s brother, Mehmet, an equal partner in Yildirim Holding, died of a heart attack in 2017. The surviving two bought out his stake last year, offering Mehmet’s son and daughter $150 million each in exchange. It was, they said, the equivalent of Mehmet’s interest at the time of his death.

Cansu, his daughter, accepted. But his son Huseyin Can didn’t, claiming the 16.7% stake he’d inherited was worth as much as $4.2 billion. In February, he sued his uncles for that amount. A local court dismissed his claim in March, but the legal battle may not be over—his attorneys say he plans to appeal or file a new case after the court issues its reasoning for the denial.

As it happens, the Saades faced a similar issue a generation ago, when Jacques feuded bitterly with his brother and one-time partner, Johnny, for almost two decades.

Such situations occur regularly among wealthy clans, particularly those who see a sudden windfall, said David Werdiger, a writer and adviser to family enterprises.

“Litigation like this,” Werdiger said, “is often a proxy for residual jealousy and resentment.”

—With assistance from Ronan Martin.

This article was provided by Bloomberg News.


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