Inheritance outstrips entrepreneurship in making of new billionaires: UBS report

SINGAPORE – Newly minted billionaires gained more of their wealth from a transfer from ageing business founders than from successful entrepreneurship, says Swiss banking giant UBS.

Of the 137 people who became billionaires in the 12 months to April, 53 inherited a total of US$150.8 billion (S$201.5 billion). This exceeded the US$140.7 billion generated by 84 new self-made billionaires over the same period.

The bank said this was the first time new billionaires acquired greater wealth through inheritance than entrepreneurship in the history of its annual UBS Billionaire Ambitions Report, which is in its ninth edition in 2023.

It said subdued initial public offering markets through 2022 and early 2023 limited the opportunities for entrepreneurs to monetise the value of their businesses.

UBS said the transfer of wealth to the next generation was “just the tip of the iceberg” as increasing numbers of tycoons age and are starting to pass responsibility to their heirs. 

“During the next 20 to 30 years, over 1,000 of today’s billionaires are likely to transfer more than US$5.2 trillion to their heirs. How do we calculate this number? Simply by adding up the wealth of the 1,023 billionaires who are aged 70 or more today,” the Swiss bank said.

As they inherit their parents’ businesses, investments, and foundations, billionaire heirs opt for careers that are more suited to their own ambitions, skills and circumstances. They focus more on opportunities such as innovative technologies, the clean-energy transformation and impact investing.

Globally, the number of billionaires rose by 7 per cent to 2,544. Their combined wealth increased by 9 per cent to US$12 trillion, UBS said.

The pace of wealth creation in the Asia-Pacific was relatively slow after considerable growth over much of the past two decades. The number of billionaires increased to 1,019 from 922, while their total wealth expanded 8.1 per cent to US$3.7 trillion.

Markets with smaller numbers of billionaires such as Indonesia, the Philippines, Singapore and Taiwan saw wealth increase by almost a third. 

The number of billionaires in Singapore grew to 41 from 34, with their combined wealth ballooning 31.2 per cent to US$135.8 billion. By contrast, billionaire wealth fell in India and expanded more slowly in China.

The average wealth of inheritors in the region was US$2 billion compared with US$1.6 billion for entrepreneurs.

Billionaires surveyed in the Asia-Pacific had a home bias, with half believing the region has the greatest opportunity for returns over the next 12 months. Many plan to increase their exposure to developed market bonds and cash as they seek a haven amid concerns of geopolitical tension.

The world’s largest concentration of billionaire wealth is still in the Americas, although there was little growth. The number of billionaires grew by 12 to 867 billionaires, accounting for a total of US$5 trillion. 

In the Americas, the average wealth of inheritors was US$2.2 billion versus entrepreneurs’ at US$1.5 billion.

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