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How a Brazillian oil billionaire lost 99% of his fortune


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http://business.financialpost.com/2013/07/26/how-a-brazillian-oil-billionaire-lost-99-of-his-fortune/

 

Eike Batista, ranked as the world’s eighth-richest person last year, ceased to be a billionaire after Mubadala Development Co. converted an investment in his companies into debt, further eroding the value of his assets.

 

Batista’s EBX Group Co. owes US$1.5-billion to Mubadala after the Abu Dhabi sovereign-wealth fund restructured a US$2-billion investment, said three people with knowledge of the deal. The fund no longer has equity in EBX, which paid back US$500-million after renegotiating earlier this month, said two of the people, asking not to be named because terms are private.

 

Batista had already amassed at least US$2-billion in personal liabilities, meaning the 56-year-old entrepreneur now has a net worth of about US$200-million, according to the Bloomberg Billionaires Index. After peaking at US$34.5-billion when the transaction with Mubadala was announced in March last year, Batista’s fortune has evaporated as missed production and reserve targets at his flagship oil company OGX Petroleo & Gas Participacoes SA spurred selling of his group’s securities.

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Most of Eike's net worth rising the way it did was a result of wild stock rises anyways. I don't think he was every truly worth more than $2 or $3 billion . Either way it's unfortunate, and goes to show you - man leverage kills.

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Brazil's Batista Says He'll Rise Again

 

http://online.wsj.com/article/SB10001424127887323342404579077483334974894.html

 

Now we know why he failed: the stars were not aligned...

 

------------

"If you look at my astrological map, this period wasn't favorable for me.

The good period? It has already started, literally this month."

Eike Batista, Sept 2013 WSJ interview

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I like the bloomberg businessweek, I recently resubscribed after catching the Hank Paulson/financial crisis installment and a couple of other interesting issues before and after.  Also, I did it via a banner add on this site, so hopefully some of that helps defray some of the overhead here.

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It seems that Batista has now lost 100% of his fortune... and a Fabergé egg.

 

"Authorities raided billionaire Eike Batista’s mansion in Rio de Janeiro this morning, impounding seven vehicles, his mobile phone and 90,000 reais in cash, among other assets, according to a police spokesman.

 

The action came after Brazilian federal judge Flavio Roberto de Souza this week ordered the seizures of financial assets of Batista, two of his sons, his ex-wife and the mother of his third child in his trial for alleged insider trading and market manipulation.

 

The police raid comes as the 58-year-old struggles to pay down debt he owes to banks and sovereign-wealth fund Mubadala Development Co. and threatens to plunge the fallen magnate further into the red.

 

Four of the startups he founded as part of his EBX group have gone bankrupt, beginning with its flagship OGX -- now known as OGPar -- in October 2013, followed by shipbuilder OSX, miner MMX and energy firm Eneva, formerly known as MPX.

 

Batista, whose fortune peaked at $35 billion in 2012 before his commodity and logistics empire collapsed, is $1.2 billion in the hole, according to the Bloomberg Billionaires Index, giving him the rare distinction of being a “negative billionaire.”

 

“All he has left now is debt,” said Marcelo Battisti, a former credit manager at Banco Itau who now heads his own consulting firm. “In normal conditions, becoming a negative billionaire is almost impossible, because most billionaires don’t tend to take on a lot of debt. Do you think Bill Gates has a mortgage?” [...]"

 

http://www.bloomberg.com/news/articles/2015-02-06/brazil-s-negative-billionaire-batista-faces-asset-seizures

 

http://www.wsj.com/articles/brazil-authorities-seize-cars-documents-from-eike-batista-1423231189

 

Batista_s_Lamborghini.jpg.2d0dec349fd00607cb014d8831286676.jpg

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A few years ago there was a positive piece about him and his empire in the Economist. Now's probably a good time to find that article and re-read it just to show that if you don't do things right and build on solid foundations, it can all disappear in the blink of an eye.

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A few years ago there was a positive piece about him and his empire in the Economist. Now's probably a good time to find that article and re-read it just to show that if you don't do things right and build on solid foundations, it can all disappear in the blink of an eye.

 

I found this article published in The Economist in May 2012. With hindsight, the impression I have of Batista is that he was more of a schemer and a promoter than an empire builder (although I guess empire builders have to scheme and promote).

 

 

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A few years ago there was a positive piece about him and his empire in the Economist. Now's probably a good time to find that article and re-read it just to show that if you don't do things right and build on solid foundations, it can all disappear in the blink of an eye.

 

I found this article published in The Economist in May 2012. With hindsight, the impression I have of Batista is that he was more of a schemer and a promoter than an empire builder (although I guess empire builders have to scheme and promote).

 

Thanks I think that's the one.

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I think there's a lot of confirmation bias when looking back and saying "yeah, I knew the guy was no good". I seem to remember a very positive interview with him some time ago and I don't think interviewer or any listeners having reservations.

 

I doubt I'd have invested in his companies simply because I mostly don't invest in companies that are losing money. But I doubt I could have called his collapse.

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