A day in the life of a super rich tech founder: buying good class bungalows (GCB) will be like going to the gas station to fill up your tank…
If you haven’t already read the news, at least three tech founders have been reported to have shopped for or bought GCBs over the past two weeks.
The first tech founder is 28-year-old Ian Ang, CEO of gaming chair maker Secretlab. He was reported to have snatched up not one but two luxury freehold properties at a whopping S$51 million. No, you did not read wrongly, the young Singaporean boss has sealed the deal to join the ultra high net worth club.
Ultra high net worth people, according to research firm Knight Frank, are those who have a net worth of at least US$30 million in liquid assets, including their primary residence.
Two other tech founders or their family – Grab’s CEO Anthony Tan and Razer’s CEO Tan Min-liang – are said to have bought or are considering buying GCBs worth between S$40 million and S$53 million.
GCBs are the creme de la creme of properties in Singapore’s estate market. To qualify as a GCB, the landed housing needs to have a minimum plot size of 15,070 square feet. Also, only a Singapore citizen can own a GCB.
Welcome to the ultra high net worth club
Globally, among the top 10 countries with the fastest-growing ultra high net worth individual (UHNWI) populations, Singapore is ranked third, behind China and Sweden.
In fact, according to data firm Statista, the number of UHNWIs in Singapore is projected to rise by 30 per cent from 2020, and reach 4,888 people in 2025.
These founders have earned their keep to be where they are. But one must note how the pandemic has led to a boost in tech consumer demand.
Research firm Randstad said that the rapid adoption and advancement of technology have accelerated the growth of the information technology industry, particularly in segments like payments, deep tech, gaming, and e-commerce.
This proves to be true, as the bosses have been reporting positive numbers for their tech companies in recent months.
We take a look at how these founders have risen in their wealth – according to publicly available information – and dig deeper to also find out if they are overspending.
Ian Ang – Secretlab CEO
A search online showed Ian’s net worth tied to his company, which was worth S$300 million six months back. The company’s operating profit climbed by nearly four times to an estimated US$52 million in the financial year ended February 2021.
The EdgeProp in June said Ian is “sitting pretty” on a company with a S$2 billion valuation.
Public records show that Ian owns a 70 per cent stake in Secretlab, while his co-founder Alaric Choo owns 25 per cent.
In August 2019, Temasek’s subsidiary Heliconia Capital Management took a minority stake in the company, which was then valued between S$200 and S$300 million.
If the records and reports are accurate, this puts Ian “sitting gloriously” on a S$1.4 billion stake in Secretlab.
This means the co-founder is spending 3.64 per cent of his shares for his S$51 million dollar properties.
Tan Min-liang – Razer CEO
Last August, Forbes listed Min-liang as having a net worth of US$650 million.
For the financial year ended 2020, Razer hit profitability for the first time since 2014, chalking up US$1.2 billion in sales. That’s an increase of 48 per cent from a year ago.
It also turned a slim profit. Min-liang had said that further growth is expected in 2021, as more people pick up the gaming habit amid the pandemic.
Razer has a market cap of HK$17.82 billion on the stock exchange, which translates to S$3.10 billion. According to reports, the CEO earns US$10 million every year.
Judging from Razer’s IPO in 2017 to date, that adds up to about US$45 million in earnings as CEO of the company.
According to an article in 2017, Min-liang owns about 33 per cent of Razer. If that is unchanged, This means that the CEO has a S$1 billion stake in the company.
Adding the increase in sales over the last year and the stake that Min-liang has in the company – barring unreported data – the Razer CEO owns around S$1.06 billion in combined shares and cash.
To spend S$52.8 million for a GCB out of that stash, means that he will be using up 4.98 per cent of his net worth.
Anthony Tan – Grab CEO
Although the news reported that Anthony’s wife had bought the house. For comparison purposes we will look at Anthony’s net worth and stake in Grab.
Grab is set to be going public in the fourth quarter of 2021. The deal is set to be valued at US$40 billion, up from a valuation of US$16 billion earlier this year.
With the deal, Anthony, who will hold a 2.2 per cent stake in Grab, could see his fortune surge to US$829 million (S$1.12 billion). If the shares trade above the deal price, it will drive Anthony on the road to becoming a billionaire.
As of 2019, Anthony was listed on Forbes with a net worth of US$380 million.
Grab’s revenue hit US$12.5 billion in 2020, more than double 2018’s figures. It jumped 70 per cent from a year ago.
Adding to Anthony’s 2019 net worth to tally with 2020, this brings his net worth to increase to US$646 million or S$873.50 million in 2020.
If we calculate the S$40 million GCB purchased based on his current net worth, Anthony is predicted to be spending 4.58 per cent of the total sum.
So are they overspending?
Now that we have broken down the numbers we have on hand, it seems to show that the founders are not spending more than 5 per cent of their net worth in properties.
With Ian sitting on the largest pile of money due to his 70 per cent reported stake in Secretlab, it seems that he is spending the least.
As for Anthony and Min-liang, it would probably be a tie on who spent more, since both of them are neck-to-neck with growth in their own businesses and Anthony’s SPAC looks set to be launching end of the year and is not complete yet.
Perhaps their seemingly “lavish expenditures” don’t seem so much after all, if we were to compare with the average person who takes up massive debt to fund million-dollar property dreams.
Property advisors have suggested for the standard rule of thumb to have 20 to 30 per cent of net worth allocated to homes. This allows the person to capitalise the advantages of real estate ownership while pursuing other avenues of investment.
Guess that this means that the tech founders are expected to be shopping around for more GCBs in time to come.
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Featured Image Credit: The Peak, Tatler