Image: Nana Kofi Acquah for Forbes
Liesel Pritzker Simmons, American heiress, studies a blue vat of human faecal matter, pulled from Accra’s septic tanks and the communal bathrooms that slum-dwellers in Ghana’s capital pay to use. She then gestures to a nearby ocean-side cliff with an ill-chosen name, Lavender Hill, where the scene is even worse, as an orange dump truck discharges sludge into the sea. This occurrence, repeated 150 times each day, creates a brown slime trail large enough to show up on Google’s satellite maps, just be- yond a fleet of fishermen in colourful wooden boats dropping their nets.
Through Pritzker Simmons’ eyes, there’s waste in this waste. “You’ve got someone that’s here for two years, and they need to spend $30 million and so they’ll do it,” she says, her voice rising with irritation. “And then they get their new post.” She’s talking about a wastewater treatment facility behind us that was designed by the Dutch, funded by the UK and Ghana and opened in 2000—only to shut about three years later when something went wrong. Goat- and sheep-herders now squat on the land surrounding the dormant facility, adding an ironic layer of animal waste around this failed solution.
But Pritzker Simmons hasn’t come to Ghana to roll her eyes at well-intended folly. She’s here to check in on the economic opportunities such debacles have created. Last year the 29-year-old and husband, Ian Simmons, 38, invested $150,000 in Waste Enterprisers, a startup that dries out human faecal sludge and turns it into fuel. The little company, with seven employees, has recently gotten some traction and is negotiating a contract to provide 2 percent of French concrete-maker Lafarge’s fuel needs in Mombasa, Kenya.
With sanitation as the building block for public health, toilet talk has become popular among philan- thropists and social entrepreneurs, led by the Gates Foundation’s Reinvent the Toilet Challenge and John Kluge Jr’s Toilet Hack-a-Thons. Impact investing is even trendier, as billionaires like Pierre and Pam Omidyar and Jeff Skoll direct hundreds of millions toward for-profit investments that carry the twin goal of public benefit, and do-gooders like Jacqueline Novogratz and Willy Foote run funds that act similarly.
What makes Pritzker Simmons’ effort notable is the absolutism with which she’s pursuing it. She has earmarked $50 million of her total fortune—which Forbes estimates at $600 million, stemming from the $500 million windfall inheritance she received a decade ago, along with assets from her husband, a blue-blooded heir to the family that built locks on the Erie Canal, co-founded department-store chain Montgomery Ward and helped take insurance broker Marsh & McLennan public—toward venture investments in for-profit social startups. These include companies like Karibu Homes, an affordable housing developer in Nairobi, and Eco-Post, a nascent Kenyan company that turns plastic into fence posts. And while the rest of that stash is invested passively, every cent, no matter the asset class, is being reallocated through the often criticised prism known as socially responsible investing (they prefer to call it values-aligned investing). They have aligned 83 percent of their fixed-income assets and 50 percent of their equities so far, and expect to be fully in compliance with their own values (the expected gamut of fair trade, sustainable and fossil-fuel-free companies) by 2018.
“To me it’s either you’re pregnant or you’re not,” she says. “You can’t be ‘a little bit.’” With a 60-year time horizon and a grubstake that exceeds half a billion, Pritzker Simmons is fully pregnant with the purest case study ever on the efficacy of conscience-driven investing.
Liesel Pritzker was famous twice over while still in her teens, and unlike better-known members of her generation of trust fund babies, it had nothing to do with arrests or sex videos. “When I talk with other peers of mine who are also inheriting wealth,” she says, “one of the best things that ever happened was Paris Hilton’s shenanigans.”
Act One for Pritzker was as a child actress. Discovered as a 9-year-old in a local Chicago production of To Kill a Mockingbird, she played to type in Hollywood, most notably as the title character in the 1995 remake of the classic film A Little Princess and as First Daughter to Harrison Ford’s president in 1997’s Air Force One. Ford compared her to a young Jodie Foster (“Liesel is just so real, it’s like a breath of fresh air”).
Hands-on: The Simmonses, in due diligence mode, have focused
much of their money on Africa
After graduating from Chicago’s New Trier High School, she attended Columbia with the idea that she could continue her acting career from New York. But as a freshman African history major she gained far more renown for a single act: A lawsuit. Over the previous century the descendants of Russian émigré Nicolas Pritzker had created one of America’s family empires, which grew exponentially thanks to Liesel’s uncle Jay, a charismatic dealmaker who bought the family’s first Hyatt hotel, and her father, Robert, an engineer who proved a genius at turning around companies under the banner of the clan’s Marmon Group. By the time Liesel was born the empire had grown to 65-plus manufacturing companies and 117 hotels and the family fortune to some $1.5 billion. Today 11 different Pritzkers appear on The Forbes 400.
Liesel’s mother, Irene, who became Robert Pritzker’s second wife, filed for divorce in 1989 after nine years of marriage. If court documents are any indication, the couple’s children—Liesel and her older brother, Matthew—became the subject of bitter quarreling. Irene got primary custody of the children, and Liesel and Matthew found themselves spending less time with the extended Pritzker clan. Meanwhile, Robert began to tinker with his children’s trusts. Controversially, he donated the children’s shares in the family holding company to the family foundation, and the children’s trusts got promissory notes; the shares were bought soon after at 600 times their stated value by the family holding company. Six years later, when the family cousins secretly hammered out a plan for divvying up the fortune, Liesel and her brother were left out.
So in 2002 Liesel sued her father and the Pritzker family. “This is not about cash,” the heiress told Forbes in 2003, her only interview about the case—and the last time she talked to the press until now. “It’s not like I think if we win, it’ll be: ‘Buy the Bentley! Bling bling!’” She added: “I filed because I wanted to know what happened. It’s going to be tricky, and it will take a long time. But I just need to know what happened.”
The very private Pritzker clan suddenly found themselves publicly exposed, salacious details and all. The case’s settlement began the dissemination of the family fortune, which had been monolithically managed like a sort of limited partnership. Liesel and her brother received payouts of about $500 million each, but sudden access to a half-billion came at a cost: Pritzker, uncomfortable with the notoriety, took leave from Columbia in search of a place where no one would know her name or face.
She wound up in Dharamsala, in north India. “When you go someplace where you’re completely foreign to anybody, you’re just there,” she says. “You’re seen for who you are and not for all of the Googling behind you, so to speak.” She’d never seen anything like it: The poverty, the masses of people, the bright colours and pungent smells. She volunteered, first with nursery school children and then as an instructor in a programme that rehabilitated heroin addicts through—yoga. “Little white girl going over and teaching yoga in India?” Yes, she shrugs, a total cliché.
It was also a turning point. On her first day as a yogi the drug addicts rolled their eyes. Pritzker responded by placing her knees on her elbows and lifting her feet into the air, balanced in a perfect crow position. “If you can do that, I’ll go away,” she told them. They couldn’t, of course. So she worked with them every day, focusing predominantly on breathing—a tool they could use outside class to calm themselves. It was the first time, she says, she realised, “Maybe I had something to offer—besides just my money.”
From there she went to Tanzania, where she spent her days attempting to do data entry for a poorly equipped microfinance office, punching in numbers on a donated computer. Most of the time, though, she strug- gled even to turn the computer on due to the building’s spotty electricity. It was a front-row view of the problems and promise of investing in the developing world.
By the time Pritzker returned to New York three-and-a-half months later, acting had lost its appeal. She enrolled in cooking school and picked up her classes at Columbia. Eventually, though, she decided to create her own education. In 2008 she gave her mother $50 million to start a foundation (separate from the $50 million now going to impact investing), which quickly focussed its efforts on education. “She was always incredibly aware of the fact that ‘There but for the grace of God go I,’” says Irene Pritzker. Her mother, in turn, hired her daughter/ benefactor to be her number two. “You’re not just pleasing or disappointing your boss, you’re pleasing and disappointing your mother,” the daughter says. Here Pritzker Simmons has been content to experiment and learn. The heiress’ first project: A pilot programme designed to marry financial literacy and microloans at a group of low-cost private schools in Ghana.
The metamorphosis was complete: The lawsuit that had scarred her had effectively reinvented her, too. And the huge cash pile that lawsuit generated was about to be put to work.
When moral criteria are a consideration for an investment, due diligence isn’t as easy as thumbing through a prospectus, something I’m reminded of as I bump along with Pritzker Simmons and her husband over dirt roads several hours north of Accra. Iggy Bassi, a former dealmaker at Broadview, a boutique M&A shop in the UK, is trying to get the Simmonses to put money into Gadco, a large-scale rice producer and processor that buys from local farmers.
Novogratz’s Acumen Fund has already invested $1.8 million, but the Simmonses thought this round’s valuations were too high (Bassi is now proposing $34 million). So Bassi pulls out all the stops for our tour, visiting a group of grateful farmers—one clad in a white T-shirt and bare feet, another wearing a blazer—who all hold their harvest income statements and describe with glee how they’ll spend their increased profits. Bassi insists that their sudden appearance isn’t planned; Pritzker Simmons looks unconvinced. It’s only when Bassi goes off on a tangent about the need for big banks to back up pioneer investors like the Simmonses that she really lights up.
“Well, exactly,” she responds. “They’re the ones who are going to move the needle on this.” Bassi has unwittingly touched on the heart of her long-term mission in Africa: By popping big returns on her $50 million impact fund, she intends to prove the concept for the larger gatekeepers of capital. “How do you demonstrate that you can actually allocate a portfolio to this—diversified, risk-adjusted meets liquidity needs? You’ve got to demonstrate it! And that’s one thing, as a family office, that we’re trying to do.”
Liesel takes the term “family office” very literally. Mother Irene still runs the IDP Foundation, first named for her initials and since reinterpreted as Innovation, Development, Progress, though Liesel intends to eventually assume management control there. Separately, Liesel and husband Ian work together nearly full-time on their international investments. The two met at a conference for global philanthropists; months later he became quite taken by her derring-do. “She knows you learn by doing and can’t get all wrapped up in high theory or a sense of total purity before acting in the world,” says Simmons, a Harvard grad who, through his own foundation, focussed on democracy-building, buying an old house in Harvard Square to shelter like-minded non-profits. The couple is aided in their decision making by Jed Emerson, who counsels high-net-worth families, and Stefan Hofmann, an independent Swiss advisor.
With just $4 million put to work so far, Pritzker Simmons expects that it will take five years to place that first $50 million. From there she expects to go much further. Their goal, she says, is to be transparent with their portfolio—the couple is still sorting out exactly how that will work—to show the many sceptics that investing for a social return, as well as a financial one, can be just as, or more, lucrative. And that a hotel heiress need not make a sex video to gain attention.
“I didn’t earn this money,” she says. “And I’ll be damned if I’m going to screw it up!” The other Pritzkers
After years of selling off assets in the family’s decade-long unwinding of its joint fortune, the 11 Pritzker billionaires, worth a combined $25.1 billion, are now forging their own paths:Gigi
, 51 ($2.1 bln), runs OddLot entertainment, which just released its frst blockbuster, Ender’s Game.Tony
, 52 ($3 bln), and brother JB, 48 ($3 bln), run Pritzker Group, a private equity and VC firm.Daniel
, 54 ($1.95 bln), is a jazz buff. He released Louis, a silent Louis Armstrong biopic in 2010.Penny
, 54 ($2.2 bln), was confirmed as US commerce secretary by the Senate in a 97–1 vote in June.Linda
, 59 ($1.8 bln), is a Tibetan Buddhist, psychotherapist and occasional donor to liberal causes.Karen
, 55 ($3.3 bln), and husband Michael Vlock are active investors backing a drug his brother developed to fight staph infections. Their venture fund has made 125 investments in five years.Nicholas
, 69 ($1.35 bln), teamed with Netfix’s Reed Hastings and philanthropist Chuck Feeney in an unsuccessful attempt to repeal California’s death penalty.Colonel Jennifer Pritzker
, 62 ($1.7 bln), formerly James, announced in August that she would now live as a woman. The retired army lieutenant colonel founded the Pritzker Military Library in Chicago in 2003.John Pritzker
, 60 ($2 bln), is chairman of Commune Hotels & Resorts, which runs 38 boutique hotels across the US.Thomas Pritzker,
63 ($2.7 bln), is chairman of Hyatt Hotels, the main source of the family fortune.
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(This story appears in the 13 December, 2013 issue of Forbes India. To visit our Archives, click here.)