Thursday 20 November 2014

Bill Gates steams in to buy Irish bonds in bet on recovery

Bumper profits on investment by world's richest man

Published 12/01/2014 | 02:30

Bill Gates with President Higgins at the Aras. Photo: Colin Keegan, Collins

THE world's richest man, Microsoft billionaire Bill Gates, has steamed in to buy Irish bonds as the threat of default was extinguished.

The Bill & Melinda Gates Foundation has made a fortune on his bond holdings, which have rocketed in value as Ireland exits the bailout.

Last week, Gates regained his crown as the world's richest man, according to the Bloomberg Billionaires index, which pegged his wealth at $78.5bn (€57.4bn), up $15.8bn in the last year.

The Bill & Melinda Gates Foundation owns nearly $20m worth of Irish bonds.

At the end of December 2012, it held close to $7.8m worth of Irish 5.4 government bonds with a maturity of 2025, $6.03m worth of Irish 5 government bonds with a maturity of 2020, and $4.14m worth of Irish 4.5 bonds with a maturity of 2020.

Those bonds have been a spectacular investment, returning close to 10 per cent over the last year.

Irish bonds were the second-best performing government debt in the Bloomberg World Bond Index for 2013, generating returns of close to 12 per cent for investors. That was only topped by Greek bonds, which saw a 47 per cent return for investors.

Giant US investor Franklin Templeton and its star trader, Michael Hasenstab, made a huge bet on the Irish recovery, buying up close to €9bn in Irish bonds. Along with Gates, Franklin Templeton is sitting on vast profits.

The Gates investment in Irish government bonds is bigger than its holdings in gilts from other countries, as his foundation lists a $14.5m holding in British government bonds, over $12m in French bonds, $4m in Swedish government bonds and $12.7m in New Zealand government bonds.

While the Gates investment in Irish bonds has generated massive profits for the Microsoft magnate, he has also seen shareholdings in seven Irish public companies absolutely soar as the ISEQ bounced back strongly over the last year.

The shareholdings are now worth over €23m.

The Gates Foundation also owns 61.6 million shares in Bank of Ireland, worth around €18.5m. It has also benefited from the share price rises at Paddy Power, holding 26,411 shares worth €1.65m. His foundation also has shares in Independent News & Media, which have quadrupled in value since the start of 2013.

The software tycoon has almost €1.1m worth of DCC shares as well as around €650,000 in Irish Continental Group stock and a stake in Aidan Heavey's Tullow Oil valued at €460,000 last week.

The Gates Foundation filings also show €270,000 worth of CRH shares. It has 2,480 warrants in Smurfit Kappa, which were carried at €112,000 at the end of 2012.

Last April, the Sunday Independent revealed that Gates and his foundation had been a major Irish bank bondholder ahead of the financial carnage that saw the Irish taxpayer left with a bill for the €64bn bank bailout.

Gates was a bondholder in Anglo Irish Bank, Irish Nationwide Building Society, Bank of Ireland and Allied Irish Banks, according to filings obtained by the Sunday Independent.

The filings detail investments held by the Bill and Melinda Gates Foundation.

The documents showed that the Gates Foundation trust held almost €27m worth of bonds in Irish banks at the tail end of 2006. This included 7.29 million bonds in Anglo Irish and associated entities, which it valued at nearly €8.15m.

The trust also detailed a holding of Irish Nationwide bonds worth €2.02m. It also had Bank of Ireland and Bank of Ireland (UK) bonds worth more than €7.7m, with a further €5.54m in AIB bonds.

The Gates Foundation trust held Irish bank bonds worth €16m at the end of 2007. Latest filings reveal that it no longer holds any bonds in Irish banks.

The Bill and Melinda Gates Foundation, based near the Microsoft headquarters in Seattle, is the largest private endowment fund in the world, with about €28bn in asset earmarked for good causes.

The primary aims of the foundation are, "globally, to enhance healthcare and reduce extreme poverty, and in America, to expand educational opportunities and access to information technology".

Nick Webb

Irish Independent

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