Legatum’s investment odyssey began in the manufacturing, importing, retail, fashion and property development sectors of New Zealand in the 1970’s. The lessons learned in small and medium-sized businesses in this competitive economy have proven to be applicable in the global marketplace, and continue to inform the firm’s approach to investing and its understanding of entrepreneurship. Daily challenges, such as the high cost of capital, volatile economic cycles and discriminating consumers,
were formative experiences which led to an appreciation for long-term investment in developing businesses and entrepreneurial innovation within commercial enterprises.
Going Global
In 1986, with New Zealand reaching the end of an economic cycle, the business focus shifted toward international investment markets, primarily in Hong Kong and Asia, and the establishment of Sovereign Global (“Sovereign”), an investment organisation based in Monaco, which focused on capital allocation to companies in the more liquid and expansive international financial markets.
Brazil, Russia, Japan, South Korea, India
In the early 1990’s, Sovereign was among the first foreign portfolio investors to enter the Brazilian stock market, investing in the banking, telecoms and power industries at a time when democratic, free market economies were emerging across Latin America. From 1993, with Russia emerging from the USSR and towards a market-oriented economy, the firm became one of the largest portfolio investors in steel, power utilities, oil and gas. For over a decade, Sovereign supported the market during an unstable and transitional period, committing capital and also actively promoting better corporate governance practices, management transparency and shareholder rights.
Within Asia, investments included the development of a substantial portfolio of prime commercial real estate in Hong Kong as it prepared for transition to Chinese rule; in Japan in 2002, significant investments in the banking sector capitalised on the apparent recovery of the world’s second largest economy from ‘the lost decade’ of deflation; and in South Korea in 2003, Sovereign became the largest shareholder in SK Corp - one of Asia’s largest oil refiners and also South Korea’s third largest “chaebol”. With SK Corp struggling to recover from a large-scale corporate fraud, the firm worked to communicate the benefits of good corporate governance and capital discipline to both the company and the community. In India, the firm’s investments accounted for more than 11% of total foreign portfolio investment in 2005. High growth rates, together with a democratic society based upon the rule of law, provide the foundation for this colourful country to continue to develop into one of the world’s leading economies.
Bridging East and West
Today, Legatum is based in Dubai, strategically positioned between Asia and Europe, bringing the firm closer to India and China, two countries that will play a major role in the global economy of the 21st century.