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India's most famous investor Rakesh Jhunjhunwala pledges to give away 25% of his wealth, sets a $1 bn corpus target for it
MUMBAI: Rakesh Jhunjhunwala, India's most famous investor, has pledged
to give away 25% of his wealth during his lifetime. He is the fourth
Indian businessperson - after Azim Premji, Shiv Nadar and GM Rao - to
make a statement of intent to give away a substantial part of their
personal wealth to philanthropy.
Announcing this on Monday
evening at an event organised by GiveIndia, a giving facilitator, the
51-year-old said he planned to route all his charity through his R
Jhunjhunwala Foundation.
He has set a 2020 corpus target of $1
billion (about Rs 4,400 crore) for his foundation, which is currently
inactive. "I treat charity as my fourth child and will divide my wealth
equally among all my children," the father of three said.
Jhunjhunwala declined to quantify his net worth, but Forbes magazine, in
2008, had ranked him 1,062 among the world's richest, with an estimated
wealth of $1 billion. Although he built his initial fortune on stock
trading, he is known today as a long-term investor who follows the value
style of stock investing, whose most successful practitioner is Warren
Buffett.
Often referred to as India's Buffett, Jhunjhunwala
picks up large stakes in companies he thinks have a competitive
advantage, ability to scale up, and good management. His multibaggers in
the past decade reportedly include
Karur Vysya Bank,
Praj Industries, Crisil, Titan, HOEL,
BEML and
Bharat Electronics. In his giving, he now joins Buffett.
Buffett has pledged to give away "more than 99% of my wealth", which is
currently valued at about $50 billion. Jhunjhunwala's blueprint for
giving reflects shades of Jhunjhunwala the investor.
For
example, he plans to hire professionals to manage his foundation. While
he declined to state the areas in which he will deploy his wealth, he
told ET: "I will support various activities. Whatever is closest to my
heart and whichever cause will give the biggest bang for my buck."
The prolific investor's giving pledge comes after the March 2011 India
visit by Buffett and Bill Gates, the world's two biggest corporate
philanthropists, who urged India's wealthy to direct much more of their
wealth to help the disadvantaged. While the duo managed to persuade 59
billionaires in the US to take the 'giving pledge', the response in
India was muted.
But now, says Dr K Anji Reddy, founder of Dr
Reddy's Laboratories, "These giving pledges have the effect of the
Buffett-Gates visit." Jhunjhunwala, however, says: "Their visit is not
the primary reason for my pledge, it has more to do with my father."
When his father was in college, he did not have enough money for his
education, and he completed his B.Com only because a friend paid for his
education.
Among the four Indian corporate philanthropists,
Jhunjhunwala is the youngest. Nadar and Azim Premji are both 66 while
Rao is 61. In September 2010, Nadar, cofounder of the HCL Group, pledged
to give away 10% of his wealth to charity.
In December 2010,
Wipro
Chairman Premji transferred 8.7% of his stake in his company - valued
at about $2 billion - to the Azim Premji Foundation, which focuses on
education.
And in March 2011, soon after the Buffett-Gates
India stopover, Rao, founder of the GMR Group, pledged his 12.5% stake
in the business, valued at about $340 million, to a family foundation.
The billions of these four businessmen are still a fraction of the
wealth of billionaires in India, whose numbers and fortune are seeing
brisk growth. According to the Forbes India Rich List, 2011, India has
55 billionaires - the third highest in the world, after the US and
China. Their combined wealth is $246.5 billion, according to a Kotak
Wealth Management report titled 'Top of the Pyramid-Decoding the Ultra
HNI, 2011'.
This is more than the combined gross domestic
product (GDP) of Pakistan and Sri Lanka. The same report said India had
62,000 ultra high net-worth households - with a net worth of Rs 25 crore
or more - in 2010-11.
The Kotak report expects this number to
increase to 219,000 by 2015-16. "Giving (in India) has a long way to
go," says N Vaghul, chairman, GiveIndia. "People have more disposable
income now, but they are not giving a fraction of that."