It's the last week of a stay at his Beverly Hills vacation manse before billionaire Peter Sondakh returns home to Jakarta. Rather than loll by a pool or play golf, he pays a George Washington University psychology professor a hefty sum to come into his gated home and assess his strengths and weaknesses. After ten hours and countless cigarettes, Sondakh has laid bare his background, values and experiences. The professor then interviews Sondakh's petite and elegant wife, Eve.
Later he will send detailed questionnaires to 20 of Sondakh's 29,000 employees, and within six months Sondakh will have the results of his assessment.
"I did this because I want to improve myself," says Sondakh, 57. "I want to know what's wrong with me. Unless you know your weaknesses, how can you improve?"
In this exclusive neighborhood in Beverly Hills known for housing the most powerful celebrities and executives, including Denzel Washington and Rod Stewart, Sondakh is perhaps one of the least recognized faces. Yet his $1 billion fortune probably makes him the richest.
Sondakh's Rajawali Group owns a stake in two publicly traded companies, including 25% of Indonesia's largest cementmaker, Semen Gresik, and 56% of the international cigarette producer and distributor PT Bentoel International. The sprawling conglomerate also owns eight high-end hotels and resorts and manages Indonesia's second-largest taxi operator, whose business model was made into a case study for developing countries by the United Nations. Among its key innovations, Rajawali's Express Taxi is credited with creating an ownership scheme where poor taxi drivers have access to credit so they can eventually own their taxis.
Sondakh's quest for learning from weaknesses has helped him not only survive the current economic crisis but also build his fortune. "The first rule in life is to know what you do not know; never assume," says Sondakh. "Get professional help. If you don't know, ask."
Sondakh considers himself a spiritual man, saying that "divine intervention" plays a significant role in his accomplishments. He reads the Bible each morning at his office before focusing on the three computer screens that face him. Inside his office he is surrounded by paintings, busts and statues of eagles. (Rajawali, the name his father originally gave his company, is the Indonesian word for eagle.) Most are gifts he received from foreign visitors. One sharp-edged eagle by his desk is made entirely out of discarded Coca-Cola cans that kids collected from the street. Sondakh paid $200 for the kids' art, part of a charity project.
Sondakh's father started a business producing coconut oil and exporting timber in 1954. When Sondakh dropped out of dentistry school in 1971 to join his father's business, it was against his dad's wishes. His father grudgingly put him to work collecting timber in his fields. Eventually, with his father's money and some of his own savings, Sondakh started building low-income housing for the poor. The venture flopped, but it served as Sondakh's introduction to property management and taught him the importance of knowing his target market.
In 1975 his father died of a heart attack at age 64. Only 22, it was up to Sondakh to take care of his mother and four sisters. Sondakh immediately took over the company, inheriting 20 employees, whom he called "uncle" because of the age differences.
Sondakh's father, who had always dreamed of opening a hotel, had been in the process of building one with several partners in Surabaya, where Rajawali was headquartered. So Sondakh and his father's well-connected friends partnered with Hyatt to build the hotel, which was completed in 1977.
From that point on Sondakh focused on managing the hotel and making new property deals, for the most part in Singapore. But in 1982, when Singapore experienced a property crash, he lost much of his money. To avoid bankruptcy, he sold his share of the hotel to Hyatt. "That's when I realized I can't rely on property," said Sondakh. "That's when I learned about diversification."
So in 1984 Sondakh started the Rajawali Group, expanding his father's old business. He developed a tourism company and started a joint venture with an opportune partner: Bambang Trihatmodjo, the second son of Indonesia's notoriously brutal and corrupt dictator, President Suharto. "They called me because they needed a partner who knows about property," says Sondakh. "People associate me with the family, but they're wrong. We did a joint venture--so what am I, part of their clan?"
Regardless of the extent of his relationship to the family, the partnership had its advantages. In 1986 the duo, with other partners, opened the Grand Hyatt in Jakarta. Three years later, with Suharto's permission, they partnered again to build Indonesia's first privately owned television network, Rajawali Citra Televisi Indonesia (RCTI). The partnership ended in 2002, however, when a dispute among the partners made Sondakh decide to sell his stake in the network.
All the while Sondakh kept building up other branches of his business. In 1989 he founded Bank Pos in a separate partnership. Two years later he gained international recognition when the government asked Rajawali to take over the cigarette manufacturer PT Bentoel Group. Originally founded by a Chinese immigrant in the 1930s as a family enterprise, Bentoel had just shocked investors by revealing $700 million in debts divided among Indonesian and foreign bankers and a negative net worth of $350 million.
The Rajawali Group stepped in, attempting to restore foreigners' confidence in the Indonesian market. Sondakh replaced senior management, hired 65 accountants and retired Philip Morris employees and consulted with kpmg Australia. By 1999 the company was posting modest profits, and a year later it became a publicly listed company. Today Bentoel boasts a market capitalization of $280 million.
The ride wasn't easy, though, especially when the Asian financial crisis battered Indonesia's economy in 1997. Rajawali, weighed down by debt, took a significant blow, along with some of Indonesia's largest conglomerates. With over $105 million in debt, Sondakh was forced to unload 30% of his businesses and assets, including Bank Pos, which eventually merged with Bank Danamon Indonesia.
Rajawali overpaid its equity, says Sondakh, so the government later returned less than 1% of Bank Danamon as compensation. Sondakh keeps this in mind as the lesson of the Asian financial crisis: Always have cash reserves.
One of the businesses that Sondakh chose to save during the crisis was his budding telecom, PT Excelcomindo Pratama (XL), which he'd bought in 1993. In the mid-1990s, Rajawali invested heavily in XL's infrastructure and billing system, making customers pay up front rather than billing them. XL eventually became a pioneer in the realm of prepaid cellular phone cards and became a publicly traded company in 2002.
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In 2005 XL's shares hit a historical high of $0.27. As competition in the industry intensified, Sondakh felt that he would need to invest heavily in technology and infrastructure to stay competitive. Instead Sondakh decided it was time to say good-bye. That's when he sold an initial chunk of his stake for $314 million. "Never get emotional with business; if you think you've maximized your profit, it's time to get out," says Sondakh. "The most difficult thing in life is selling--the easiest thing is buying.
Two years later, in what turned out to be remarkable timing, Sondakh sold his remaining 16% stake in XL to United Arab Emirates mobile operator Etisalat, pocketing an additional profit of $438 million. Since the deal took place, the telecom's stock took a 49% plunge (not including the declining Rupiah), closing at $0.09 on Feb. 13.
The cash came at an opportune time. The cementmaker Semen Gresik, which the Rajawali Group bought from Cemex for $337 million in 2006, is today worth $450 million, the bulk of Sondakh's fortune. But with commodity prices and home-building supplies in free fall, the stock has plunged 40% since reaching an alltime high in November 2007. Sondakh says he doesn't worry when it comes to building supplies or commodities, that the prices for them will eventually rebound.
Today he is sitting on a pile of cash reserves of more than $400 million, with the ability to buy up some of the bargain-priced assets. He is wary of "bottom fishing," but this is not to say he hasn't been fishing. He sees a bright future in Indonesia's natural resources industries. The group is building palm oil plantations in South and East Kalimantan. He is bound by a nondisclosure agreement but says Rajawali will probably make a tender offer for a foreign mining company sometime in 2009.
Sondakh is also a believer in Indonesia's tourism industry, which last year generated $7.5 billion and has been growing in the double digits in the past few years, according to Indonesia's Ministry of Culture & Tourism. The Rajawali Group has been expanding its reach in high-end hotels, such as the elite Starwood resort in Bali that just opened in September and charges between $800 and $900 a night.
What about the psychological dissection he submitted himself to? The results of the analysis have yet to come back, but the psychology professor has suggested that Sondakh write a book about his experiences.
Rather than becoming an author, Sondakh prefers to live among the famous faces in anonymity. "What I'm most of afraid of in life is pride," he says. "The key is to keep yourself humble and to continue to improve yourself."
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