Part III: Malcolm Turnbull's wealth

It is well known that Malcolm Turnbull's father started with little, but the same can't be said about the Prime Minister himself who, in the words of family friends, inherited a motza.

In Part III of this special series, Paddy Manning tells the story of a prime minister who took that fortune and amassed his own on the back of talent, luck and hard work.

In his maiden speech to Parliament in 2004, Malcolm Turnbull recalled that he grew up "living in flats - mostly rented", and that his father Bruce made a huge financial sacrifice to send him to one of the best schools in the country, Sydney Grammar.

It is true that Bruce Turnbull started from nothing and his business as a hotel broker was patchy at first. But the Prime Minister is not as self-made as most people think.

By the time Bruce died in a plane crash in 1982, when Malcolm was 28, he had property all over the place and no longer had to work. Old mates say he kept the best hotel deals for himself and a group of co-investors, and he had interests in big-drinking pubs in working class suburbs such as St Marys in Sydney's west, Warners Bay on the NSW Central Coast, and Newcastle. These pubs were a great money-spinner in those days, before random breath testing was introduced in NSW in 1982. By the end of his career, easing into semi-retirement, Bruce was also getting a steady income stream from a 10 per cent share of all deals done with his real estate license. He was also an avid personal investor in property, buying and selling a string of homes in Sydney's eastern suburbs, and had bought the beautiful farm in Scone which many of us have seen on the ABC's Australian Story and Kitchen Cabinet.

Special series: The Turnbull Ascendancy Monday: Politics Despite 35 years in the limelight, Malcolm Turnbull's political convictions remain a mystery to many. What does he stand for? Tuesday: Mentor Malcolm Turnbull often pays tribute to John Howard and Robert Menzies, but closer to his heart is former NSW premier Neville Wran. Wednesday: Wealth The Prime Minister is not as self-made as most people think. But the fortune he went on to make came largely from a combination of talent, luck and hard work. Thursday: Record The rollout of Malcolm Turnbull's NBN rollout is not going well. But he should be judged on how he played the cards he was dealt. Friday: Optimism It won't be easy for Malcolm Turnbull to keep Australia positive in the face of the threats posed by terrorism and climate change.

When Malcolm Turnbull talks about growing up in flats, some were indeed ordinary, but the Turnbulls lived longest in a generous Point Piper flat with stunning views of the Harbour Bridge, worth millions today.

Malcolm was the sole beneficiary of his father's estate. According to a flattering 1988 profile in Fairfax's Good Weekend, Turnbull inherited some $2 million. In today's dollars, that's roughly $7 million. Turnbull went on to make a motza, but as old friends of the family told me: "He inherited a motza too." Turnbull no longer had to work for anyone. He was master of his own destiny.

There is no denying that the fortune Turnbull went on to make came largely from a combination of talent, luck and hard work. From very early on, he showed his father's eye for a property deal, and in his early twenties, was already picking up cheap terraces in the inner-city suburbs of Redfern and Newtown, and renting them out.

He would have been on a decent wage working as Kerry Packer's in-house lawyer, but the late media mogul gave a helping hand in other ways too, selling Turnbull a home at Bellevue Hill for $280,000 in 1982, which Turnbull sold five years later for $1.4 million. Turnbull made some dud acquisitions: he took a bit of a bath on his next home, paying a record $2 million in Paddington, selling it some years later for a small loss, and lost millions on a small Sydney Lower North Shore shopping centre. But the wins outnumbered the losses.

Office space right next to Packer's headquarters at Park Street, which for a time housed his law firm and merchant bank, as well as other tenants, turned a tidy profit. And of course Turnbull and his wife Lucy did extremely well buying their 1930s mansion at Point Piper, formerly known as Le Gai Soleil, for $5.4 million in 1993. The family have renovated, and bought and sold next door (for another tidy gain) to add to their holding, but much the same property is worth as much as $50 million today.

Turnbull started to make serious money when he quit working as a lawyer - after defending Kerry Packer through the Costigan Royal Commission, and winning the famous Spycatcher case against the British government. He went into merchant banking where his partnership with Nicholas Whitlam, son of the former prime minister, was initially very successful. The pair gained fat fees advising Warwick Fairfax on his ill-fated privatisation of Fairfax in 1987 before the two high-flyers parted ways rather acrimoniously less than two years later.

Turnbull also made a lot of money with Neville Wran, the former NSW Premier, who was chairman of Whitlam Turnbull, and who remained his business partner after Whitlam was bought out. Turnbull and Wran had a lucrative office cleaning business, Allcorp, which snaffled up contracts so quickly that rivals were agog. The pair made more money on mining deals - in Russia, China, and Africa - which, on Turnbull's own account, involved some rather colourful partners. Turnbull made a multi-million dollar profit on a very-quick-turnaround investment in a Solomon Islands logging company, raising questions about his environment credentials.

These forays generated millions, but Turnbull wasn't vaulted into the ranks of the truly mega-rich until he joined his old boss, former Bulletin editor and ACP managing director Trevor Kennedy, to invest $450,000 each in the internet company OzEmail, founded by tech pioneer Sean Howard. That was in 1994, and by the end of 1998 Kennedy and Turnbull had sold their stakes for $120 million combined, when OzEmail was bought by US giant MCI-Worldcom. Turnbull's personal share of the OzEmail windfall was $40 million and he debuted on the BRW 200 Rich List in 1999 with an estimated fortune of $65 million.

There is no question that Howard was the visionary behind OzEmail, but Turnbull's work went well beyond just putting up some capital. OzEmail broke all sorts of new ground, including being the first Australian internet company to list on the NASDAQ exchange. Turnbull drafted the prospectus and did a sterling job of pitching the float to US investors on a hectic roadshow, alongside chief operating officer David Spence. Turnbull was instrumental in extracting a high bid from Worldcom. And OzEmail was a genuine, profitable business, unlike so many Australian dotcoms.

It was not just a case of good timing, either, when Howard, Turnbull and Kennedy got out ahead of the 2000 tech wreck. The troika proved they were adept at building and selling internet businesses by pulling off a repeat performance after the bust, selling web host Webcentral to Melbourne IT for $61 million - twice what they'd paid for it in 2006. Amazingly enough they did it again in 2012, selling the Australian-developed search engine ISYS to Lexmark for $32 million.

As Kennedy generously observed: "Malcolm and I have been led by Sean's technology brilliance for eighteen years and this marks the end of it."

Turnbull then got very lucky at Goldman Sachs. He sold his merchant banking business, Turnbull and Partners, to the legendary Wall Street firm in 1997 and took over their Australian operation. Turnbull's time at Goldman was relatively short and unimpressive. With the Howard and Kennett governments embarking on major privatisations, Australia was a honey pot for investment banks in the late 1990s and it was understood Goldman had hoped to use Turnbull and Wran's connections with NSW Labor to win advisory work on likely electricity privatisation under then Premier Bob Carr. But electricity privatisation stalled, and the big government advisory fees never turned up. Instead, Turnbull spent most of 1998 working on the privatisation and then sale of insurer FAI, ultimately to HIH - a deal that would embroil him and Goldman Sachs in a royal commission and an expensive, long-running liquidators lawsuit after HIH collapsed.

That lay ahead. Within a year of joining Goldman Sachs, as a country chief, Turnbull was lucky enough to be included among 57 new partners, joining only 246 of the bank's 12,500-strong staff around the world. Announced every two years, a Goldman Sachs partnership was one of the most coveted prizes on Wall Street, and in Turnbull's case it was especially bountiful: by mid-1999 it was converted into a share of the bank's $30 billion float on the New York Stock Exchange. On debut Turnbull's holding was worth at least $40 million and by the time he left the bank two years later, the share was worth more than $70 million - and it has kept on rising since. It was the biggest windfall of Turnbull's career and it was basically luck that he happened to join Goldman Sachs when it was floating.

Turnbull's fortune nowadays is estimated at around $200 million. He no longer makes the BRW Rich 200, which had a cut-off of $286 million. Since he embarked on a career in politics in 2001, Turnbull's investments have been increasingly arms-length and passive. He has sought to insulate himself from any potential controversy such as occurred in October when he was targeted over his holdings in hedge funds based in tax havens like the Cayman Islands.

Turnbull insists he pays all his tax but we must take him on trust: a myriad private family companies mean his holdings are almost completely opaque. What's clear is the trend: since he was in his twenties, Turnbull's wealth has gone up, and up, and up. Turnbull owes his fortune to no-one. Between his inheritance, his savvy property nous, his merchant banking deals, his dotcom forays, and his windfall gain from Goldman Sachs, Turnbull is a self-made man in the style, if not the scale, of Rupert Murdoch, who did inherit a single newspaper in Adelaide from his father Keith, but then turned it into a global empire.

This is the third in a five-part series of opinion articles. Tomorrow: Part IV: Turnbull's record.

Paddy Manning is a journalist and author of the recently published Born To Rule: The Unauthorised Biography Of Malcolm Turnbull (MUP).

Illustration: Simon Bosch.