UBS Group AG’s billionaire clients are betting the energy sector offers the biggest opportunities over the next five years.
Almost half of the super-rich clients the bank surveyed said energy was attractive for future investment returns and business, the most among 21 categories overall, according to a report published Thursday. About a third of the 50 billionaires polled also viewed biotechnology, pharmaceuticals and software as attractive areas, the Zurich-based firm said.
Energy bets have been on the rise as Russia’s invasion of Ukraine has disrupted supply chains and created shortages globally. India’s Gautam Adani, a coal tycoon who’s now boosting his green ambitions, has become the world’s third-richest person after amassing more than $50 billion this year, according to the Bloomberg Billionaires Index.
“They favor energy, possibly due to today’s supply constraints and the accelerating secular transition to renewables,” UBS said in the report, which was co-authored by wealth-management executives Alice Page and George Athanasopoulos.
Many of the world’s ultra-rich have been looking into energy in recent years. The Bamford family behind construction-equipment maker JCB launched an investment fund in 2021 focusing on the hydrogen industry, while a firm for the owners of European oil and gas company Perenco helped set up a fund in 2019 focused on uranium, the fuel for nuclear reactors.
Meanwhile, others are cashing in. Carlos Slim and his family more than halved their stake in US oil refiner PBF Energy Inc. this year as the company’s shares surged. They also cut their stake in PBF Logistics, which completed a merger with PBF Energy in November after the stock jumped more than 75% since January.
“We’re starting to see billionaire entrepreneurial capital starting to shift through,” Page, head of the ultra-high net-worth solutions group, said about the energy sector. “This form of billionaire capital is often a leading indicator of where investments are likely to go.”
Those surveyed viewed Asia Pacific excluding mainland China and North America as the most attractive regions for business and investment opportunities over the next five years. The report said there were 2,668 billionaires globally worth $12.7 trillion as of March, a drop of about 3% from 2021.
Rising interest rates to fight inflation and a weakening economy have eroded assets, and the world’s 500 richest people have lost almost $1.3 trillion of their combined fortunes this year, according to Bloomberg’s wealth index.
--With assistance from Marion Halftermeyer.
This article was provided by Bloomberg News.