Brazilian mogul Eike Batista has had a rough time recently. Once thought to be the richest man in the southern hemisphere, Batista has watched his assets dwindle to become a mere shadow of what they once were, according to a story in the Economist.
Last year his oil and gas drilling firm OGX, the heart of his financial empire, turned out to have severely overestimated the oil reserves it controlled. As investors and state-controlled banks flooded the once darling of the Brazilian economy with sweetheart deals and low interest loans, OGX was only able to pull about 17,000 gallons of oil a day from its most prized reserves. That fell short of the projected yield by over 60 percent reported the Daily Beast. The news of the low yields came in August, and by October investors and top executives were distancing themselves from the company and the stock was trading at pennies a share. Having lost the confidence of investors, Batista was forced to file for bankruptcy protection.
The news put his other assets — all carry his trademark letter “X” in their name — at risk as well. Cerebus, an American private equity firm, started eyeing Batista’s shipbuilding outfit OSX. A German firm bought out a piece of his energy company MPX and EIG Global Energy Partners of America bought his port operations company LLX. Such pillaging means Batista has witnessed his fortune drop from $30 billion to a meager $200 million.
It must be tough for a guy who used to love to flash his cash around. For years Batista was known to keep a Lamborghini and Mercedes-Benz SLR McLaren on display in his living room. Ostentatious as that may seem, he also threw money around when it came to charities. He once brought singer Madonna to tears by donating $7 million to her charity “Success For Kids,” and he wrote $2 million worth of checks to buy and install a badly needed MRI machine for a hospital in Rio de Janeiro.
“I was floored,” says neurosurgeon Paulo Niemeyer, who had contacted Batista for help.
Experts say the fall of Batista was to be expected. They don’t necessarily blame him though, they blame Brazil’s inexperience in the global marketplace. Jean-Paul Prates, chief of Brazilian oil and gas consultancy Expetro, said that Brazil buying into Batista’s ventures turned out to be “the biggest sham in the country’s recent economic history.”
“Our market isn’t just young, it’s in its infancy,” he added. “This reflects poorly on Brazil, which comes off as an immature market. The next time there’s a public stock offering in the oil sector, investors are going to think twice.”
That may be the case, but it is likely little comfort for Batista who is left only to sweep up the remnants of his kingdom.