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10 of the Most Valuable Private Companies

John Divine

The world's biggest private companies in 2020.

Everyone knows the world's most valuable public companies. Apple (ticker: AAPL), Amazon.com (AMZN), Microsoft (MSFT) -- on a day-to-day basis, anyone in the world can take to the web and see the largest names on Wall Street. Privately owned companies are a different story; they're tightly held and opaque, making it hard to put a dollar value on. What follows is a list of 10 of the world's most valuable private companies in 2020, with some adjustments taken into consideration for businesses with more or less staying power in light of the pandemic.

ByteDance

With all the curveballs 2020 has been throwing, perhaps it's par for the course that one of the most valuable private companies in the world has an absurd-sounding name. Founded in 2012, this Chinese internet technology company is the youngest business on this list, but its worth has been soaring -- despite the virus ravaging the global economy -- as its crown jewel, social media app TikTok, soars in popularity. Through various brands and subsidiaries, ByteDance's value derives from its more than 1 billion monthly active users on its social media and online content platforms. Investors expect it to capture as much as 19% of China's online ad market in 2020. TikTok, the popular bite-sized video-sharing platform, appears distinctly susceptible to a fad-like fall from grace. But for now, it has plenty of momentum with upward of 800 million users.

Potential valuation: Around $90 billion

Cargill

Founded in 1865, Cargill is a massive agricultural conglomerate and the largest private company by revenue in the United States. Much of the food that feeds America is facilitated in some way by Cargill's products and services, which include livestock feed, additives, dairy, beef and poultry slaughterhouses, salt, grain and many other vital parts of the supply chain. The company also has a large ocean freight business and is a big player in commodities trading, offering risk-management solutions for large producers or consumers who may need to hedge against a rise or fall in the price of energy, metals, agricultural products or currencies themselves. While the pandemic has surely impacted its operations, revenue in fiscal 2019 was $113.5 billion. Cargill's low-growth, low-margin business makes for a valuation far lower than that amount, however.

Potential valuation: $40 billion

Koch Industries

Right at the top of the heap among the biggest private companies on earth is the diversified industrial conglomerate Koch Industries, which, behind Cargill, took the No. 2 spot on Forbes' 2019 "America's Largest Private Companies" list. Only a few billion behind Cargill in revenue, Koch takes in about $110 billion per year in revenue. Founded in 1940, the company has grown to hold influence in products like asphalt, natural gas, plastics, fertilizers, chemicals, commodities trading, finance and many other areas. Held tightly for many years by Charles and David Koch, the Koch brothers held an 84% ownership stake between them for decades until David Koch's death in 2019. The brothers have used their wealth to reshape American politics.

Potential valuation: About $105 billion

Stripe

Payments company Stripe is currently the most valuable tech startup in the United States. Its valuation is more well-known than many of the world's most valuable private companies because of a recent funding round that, in the midst of a pandemic, valued the company at $36 billion. The company, which enables online payments, is actually seeing a rapid onboarding from offline to online payments in the wake of the pandemic, along with a $600 million funding round in April that included prestigious venture capitalist investors like Sequoia Capital, Andreessen Horowitz and Alphabet's (GOOG, GOOGL) GV, Google's investment arm. The company plans to spend money on expansion and has been considered one of the most anticipated initial public offerings of 2020.

Potential valuation: $36 billion

Albertsons

Founded in 1939, grocer Albertsons deserves mention as one of the largest private companies for its revenue alone, which comes in around $60 billion a year and makes the company a member of the Fortune 100. The second-largest grocer on the continent next to Kroger (KR), Albertsons has mulled an IPO a couple of times before, and as 2020 began, the company was flirting with going public yet again. The company certainly may not remain private forever, but for now, especially as grocery stores prove to be one of the most vital entities in society, Albertsons remains one of the most important private companies in the U.S. Due to rock-bottom margins inherent to the grocery industry, Albertsons would be valued at a fraction of its revenue.

Potential valuation: $19 billion

SpaceX

One of several prominent space transportation companies founded by billionaires, Tesla (TSLA) CEO Elon Musk's SpaceX is likely the most prestigious and blue-chip of the group, which includes Jeff Bezos' Blue Origin and Richard Branson's brainchild Virgin Galactic (SPCE). Musk founded the company in 2002 with the goal of eventually colonizing Mars. While not quite there yet, the scientific breakthroughs and operational achievements SpaceX has achieved are remarkable. In 2015, SpaceX's Falcon 9 rocket became the first orbital rocket to land vertically. The concept of reusing wildly expensive rockets is a revolutionary one, and SpaceX's Falcon 9 will ferry NASA astronauts to the International Space Station for the first time in the coming months. SpaceX is also now the largest commercial satellite operator in the world. A 2020 funding round of $250 million valued the company at $36 billion.

Potential valuation: $36 billion

Palantir Technologies

Along with CEO Elon Musk, Peter Thiel is another member of the so-called "PayPal Mafia," a group of entrepreneurs who went on to start incredible companies after founding the online payments company PayPal (PYPL). Intelligence, data gathering and analytics firm Palantir, co-founded by Thiel, is one of the crown jewels in the venture capitalist's portfolio. A notoriously secretive firm, the company offers its big data analytics services to the government for anti-terrorism and anti-fraud purposes, and also boasts clients like hedge funds and world-class pharmaceutical companies. One reason Palantir has been slow to go public is the nature of its surveillance work with the U.S. government; the firm reportedly has contracts with Immigration and Customs Enforcement (ICE) that allows the agency to easily track the identities and movements of targeted immigrants.

Potential valuation: Between $20 billion and $40 billion

Epic Games

Epic Games is arguably one of the most interesting businesses among the world's most valuable private companies. Although China's Tencent (TCEHY) has acquired about 40% of the gaming and graphics company, it's still majority-owned by its founder and game developer Tim Sweeney. Although the company's popular video game Fortnite is the reason most people might know of Epic Games, its biggest asset is actually the software that enables that game on the back end, something called Unreal Engine. The game engine offers tools and functionalities that developers can use to build their games, and private investors are betting the powerful engine will eventually have applications in a wide array of fields ranging from architecture to medicine -- not just video games.

Potential valuation: $15 billion

Aldi

Founded in 1946, German supermarket chain Aldi is a global giant, with annual revenue around $80 billion. Like other grocers on this list, Aldi's business has proven invaluable in the age of 2020's pandemic, and this staying power and low risk makes its business attractive for long-term investors interested in slow but steady growth. Unfortunately, although the company has more than 11,000 locations worldwide, investors may never get the chance to throw their money behind it, as the firm is privately controlled by the Albrecht family. Aldi also owns the popular Trader Joe's grocery chain.

Potential valuation: $40 billion to $50 billion

Vitol

Last -- and certainly not least, in terms of revenue -- is Vitol, the Dutch energy giant and commodities trading firm. Founded in 1966, Vitol has grown to become the world's largest non-governmental private company by revenue, bringing in sales of $225 billion in 2019. Although the firm almost certainly saw its business hit by the unexpected pandemic in 2020, wherein oil prices turned negative, Vitol's diversification should allow it to easily weather this crisis. Its massive trading arm often benefits in times of extreme volatility, and aside from oil production and refinery, the company also owns storage capacity (which has been in high demand due to oversupply). With high fixed costs and expenses like hedging to constantly worry about, margins are low.

Potential valuation: $20 billion

10 of the most valuable private companies:

-- ByteDance

-- Cargill

-- Koch Industries

-- Stripe

-- Albertsons

-- SpaceX

-- Palantir Technologies

-- Epic Games

-- Aldi

-- Vitol



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