Bill and Melinda Gates divorce highlights secret fortune

The fortune of Bill Gates and Melinda French Gates exceeds the size of Morocco’s annual economy, combines the value of Ford, Twitter and Marriott International, and is triple the Harvard endowment. While not many people know how their wealth will be divided in divorce, one thing is clear: Dissolving it can’t be easy.

Mr. Gates built one of the greatest fortunes in human history when he founded Microsoft in 1975 with Paul Allen. The Gates’ net worth is estimated to be over $ 124 billion and includes assets as diverse as real estate trophies, public company stocks and rare artifacts.

There is a big stake in the Four Seasons luxury hotel chain. There are hundreds of thousands of acres of farmland and ranch land, including the historic Buffalo Bill Ranch in Wyoming. There are billions of dollars in stocks in companies like AutoNation and Waste Management. There is an oceanfront mansion in Southern California. And one of Leonardo da Vinci’s notebooks.

“The amount of money and the diversity of assets involved in this divorce catches the imagination,” said David Aronson, a lawyer who has represented high net worth clients in divorce cases. “There have rarely been cases where the size is even close.”

Only the 2019 divorce between Amazon founder Jeff Bezos and his now ex-wife, novelist and philanthropist MacKenzie Scott, was more significant. Mr Bezos had an estimated fortune of $ 137 billion, although mostly in Amazon stocks, and Ms Scott retained 4% of Amazon stock, worth $ 36 billion at the time.

But Mr. Gates has for decades diversified his holdings; he only owns 1.3% of Microsoft. Instead, its stock portfolio includes stakes in dozens of publicly traded companies. He is the largest private owner of farmland in the country, according to The land report. In addition to the Four Seasons, it owns stakes in other luxury hotels and a company that caters to private jet owners. Its real estate portfolio includes one of the largest houses in the country and several equestrian facilities. He owns stakes in a clean energy investment fund and a nuclear energy start-up.

There is also the Bill and Melinda Gates Foundation. Separated from the rest of Gates’ fortune, with an endowment of $ 50 billion, the foundation is one of the largest charities in the world and plays a particularly important role in global public health. The endowment is in a trust and cannot be divided as part of marital status, although questions remain as to whether it will be the primary beneficiary of their charitable contributions once the split ends.

The couple have a separation agreement in place, according to Ms French Gates’ divorce petition, but details are withheld. The filing asks the court to distribute their real estate, personal property and debts according to the terms set out in this agreement. Lawyers for Ms French Gates have been working on a plan to separate some assets since 2019, a person familiar with the case said.

Divorce attorneys not working on the Gates split say some personal assets could be difficult to value, difficult to separate and extremely complex. Some of the wealth has already been divided: Shortly after the announcement, $ 2.4 billion in shares of AutoNation, Canadian National Railways and two Mexican companies owned by the couple were transferred to Ms. French Gates, making her a full-fledged billionaire.

A detailed list may be more difficult to find.

“Divorces are actually one of the times when things crumble and the light shines,” said Chuck Collins, senior researcher at the Institute for Policy Studies in Washington and author of “The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions “. But he added that prenuptial agreements and settlements were designed for privacy. “Some parts of a marriage contract deal with the non-disclosure of all family trusts and stuff,” he said. “They have it all planned out before you fall in love.”

At the same time, lawyers point out that the issues that cause friction in the average divorce are completely absent for the stratospheric wealthy.

“It’s almost easier to settle a case like this, if the parties are inclined to do so, than to settle a case where people live comfortably, but don’t have enough to live comfortably once they have. everything split in half, ”said Mr. Dit Aronson. “For these people, that will only change to the extent of how many billions of dollars they can give what they want.”

At the center of the Gates fortune and the Gates Foundation endowment is a little-known entity called Cascade Investment. Based in Kirkland, Washington, and led by Michael Larson, former bond fund manager for Putnam Investments, Cascade has overseen both the endowment and most of the personal wealth of Mr. Gates and Ms. French Gates for decades.

Mr. Gates began reducing his stake in Microsoft from the initial public offering in 1986, when he owned 45% of the company, a stake of $ 350 million at the time. Today, he has an estimated net worth of $ 124 billion, according to Forbes, or $ 146 billion, according to research firm Wealth-X. Including the Gates Foundation endowment and Gates’ personal fortune, Cascade is most likely overseeing assets that put him at or above some of the world’s largest hedge funds.

Mr. Larson operates Cascade with an obsessive level of secrecy, going to great lengths to hide the company’s transactions so that they cannot be easily traced back to the doors. In one 1999 interview with Fortune magazineMr. Larson said he chose the name “Cascade” because it was a generic name in the Pacific Northwest.

Mr. Larson’s wealth management strategy is based on value investing – a long-term approach to finding strong, undervalued stocks. This approach is often associated with Warren E. Buffett, who is a close friend of Mr. Gates. Mr. Larson focuses on buying and owning physical businesses rather than high growth tech stocks. (Mr. Gates chooses his technology investments and owns them outside of Cascade.)

This strategy pays off for foundations and family wealth, both of which tend to focus on preserving wealth rather than risky bets.

“He delivered the best possible result for decades, with absolute discretion,” said Roger McNamee, a Silicon Valley investor who helped found private equity firm Elevation Partners and worked with Mr. Larson in the past.

Credit…Scott Olson / Getty Images

Mr Larson has a particular fondness for luxury hotels, betting that top-tier properties are more resistant to recessions than low-budget accommodation. Cascade owns several Four Seasons hotels, including one in Whistler, Canada, as well as the Charles Hotel in Cambridge, Mass.

In 2007, Mr. Gates teamed up to buy the Four Seasons hotel management company with Prince Alwaleed bin Talal for $ 3.8 billion, each taking a 47.5% stake. Although Cascade has declared a long-term commitment to Four Seasons, in recent years Cascade and Kingdom Holding, Prince Alwaleed’s family office, have flirted with the idea of ​​quitting at least part of their investment, according to one person. close to their thinking.

At the end of 2019, Mr Gates and Prince Alwaleed discussed the possibility of an initial public offering of shares worth $ 10 billion, the person said. The idea of ​​an IPO or private sale of one or both of the issues has come up again in recent months, the person added.

Kingdom officials had no immediate comment. A Cascade spokesperson declined to comment.

Mr. Gates and Ms. French Gates have played such a huge role in philanthropy that questions about the future of the Gates Foundation immediately arose after the divorce was announced. The foundation directs billions to 135 countries to help fight poverty and disease. In 2019, he had donated nearly $ 55 billion. (In 2006, Mr. Buffett pledged $ 31 billion of his fortune to the Gates Foundation, dramatically increasing its grants.)

Since leaving his day-to-day activities at Microsoft in 2008, Mr. Gates has devoted much of his time to the foundation. He also runs Gates Ventures, a company that invests in companies working on climate change and other issues. Over the decades, Mr. Gates has cast the image of a ruthless tech executive battling the United States government to use antitrust laws to be seen as a global benefactor. And he seems perfectly aware of the stark contrast between the scale of his wealth and his role as a philanthropist. “I have been disproportionately rewarded for the work I have done – while many others who work this hard have a hard time doing it,” he said. recognized in a 2019 year-end blog post.

The Bill and Melinda Gates Foundation was established in 2000. Today the two are its co-chairs, which the foundation says will not change once the divorce is over.

But Ms French Gates has recently been more public about the efforts of her other group, Pivotal Ventures, which focuses on gender equality and social progress. It’s still unclear what level of resources will be available to her once the divorce is over, but Ms. French Gates will likely still wield a huge influence in the world of philanthropy.

“There is no explanation as to how you end up in this position of privilege,” Ms. French Gates told The New York Times last year. “There just isn’t any.

Matthew goldstein contribution to reports.

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