The Hurun Report talks of the stories of successful entrepreneurs through Hurun’s global platform spread across the UK, China, India, the USA and the UAE, according to its India chief. Established in 1999, Hurun Report is headquartered in London and was started by Rupert Hoogewerf, a British chartered accountant, to understand wealth creation in China. “We broke the taboo with wealth disclosure in China and are a household name there,” says Anas Rahman Junaid, Managing Director and Chief Researcher, Hurun Report India. Fast forward, around 12 years later, Junaid met Rupert at Oxford University and the duo thought it was the right time to speak about wealth creation in India as they saw India booming. “My job is to understand the new wealth creators, talk about their stories and position India as the land of opportunities and wealth creation to the world. In that process, I hope to help India gain by way of investments through Hurun global platforms. Hurun Report is officially the largest compiler of the rich list in the world,” claims Junaid in an interview. Excerpts:
Does your research work get extended right through a given year?
Hurun Report has a team of 100+ researchers globally and we continuously research about entrepreneurs and try and meet them wherever possible.
Since we do a point in time list, we do look at the data as of the cut-off date as well. Tracking wealth and wealth creators is an ongoing process; analysts are assigned specific geographies and industries to capture industry- and country-specific trends into our valuation.
Do you get the individual/entity to state its version on net worth?
No. We do not expect and require the entrepreneurs to share their version of net worth as we believe it affects the independence of valuation. We would require the financials only.
How do you arrive at a measure of the wealth, given the constant flux in the markets and the economy at large?
We use four-five valuation methodologies. Each of these methodologies has variables that are heavily dependent on the global volatility.
For instance, the last couple of years have been bad for real estate in West Asia, this year was particularly good for Indian retail. So, the variables that will have an impact on the discount factor, cost of opportunity, multiples, and so on, would be taken into account.
We also take into account country risks. For instance, companies such as Zara saw a reduction in its market cap; however equivalent companies in India saw an increase in valuation.
So, the policies of a government, systemic risks, beta and other valuation-dependent variables would definitely be impacted depending on the country risks.
Are bull and bear case scenarios factored in here? What are the assumptions made?
Yes. Assumptions are made based on stability of the company, stability of the economy, stability of the opportunity, policy decisions, and so on.
We supplement our valuation with scenario-based value estimates that are dependent on shift in market demand, change in competitive landscape, the impact of a new product launch, regulatory change, a shift in macro-economic conditions, and so on.
How do you differentiate between publicly-traded companies and closely-held ones?
Market liquidity is the key differentiating factor between publicly-traded and closely-held companies, and lack of market liquidity reduces a private company’s value.
How do you value a company/enterprise whose performance is tied to the fortunes of a single individual?
We factor in a key man discount to the company’s average equity value; we arrive (at this) through various valuation methodologies. First, we evaluate whether a key person risk exists; if yes, we will incorporate the key person risk into the valuation of the company.
What’s the outlook for India and China in personal wealth sweepstakes in the next five to 10 years?
China is already the number one billionaire-creating country in the world.
The number of Chinese billionaires has grown to 819, 40 per cent more that in the US. India is currently at 170.
If you were to consider key indicators such as GDP, urbanisation, and average age, the Indian economy is very comparable to China 10 years ago. And when India hits a GDP of $9 trillion in the next 10 years, I would expect the count of Indian billionaires to be at over 500.
Around 153 IPOs hit the Indian stock market in 2017. This year looks even better.
This is just the tip of the iceberg. All the entrepreneurs who have built their companies would either further expand or cash out of the brand in the next 10 years.
As more and more Indians in rural areas get access to the Internet due to rural electrification and the Digital India campaign, the overall consumer market size would exponentially increase, directly impacting the wealth creation of entrepreneurs.