From $ 33 billion to $ 200 million networth – Eike Batista’s fascinating story

Brazilian businessman Eike Batista’s story is as fascinating as it can get. Batista heads the Rio de Janerio based conglomerate EBX which in turn has holdings in the 5 operating companies; MMX (mining), MPX (energy), OGX (Exploration & Production), LLX (logistics) and OSX (offshore shipbuilding industry).

According to wikipedia http://en.wikipedia.org/wiki/Eike_Batista this metallurgical engineer started off with selling insurance policies and then swtiched to mining. His first venture apparently was a mechanized gold mining plant in Brazil which marked the beginning of his mining conglomerate EBX.

He regularly featured as one of the most powerful and influential Brazilians. By 2009 he was the richest Brazilian and by 2011 he became the richest South American and 8th richest in the world. He even claimed that he would overtake Mexico’s telecom tycoon Carlos Slim to be the world’s richest man by 2015. However, Batista’s wealth has fallen off the cliff decreasing from a peak net worth of $32 Billion to $200 million between Mar 2012 to July 2013, i.e a fall of 99%.

Although the fall is in line with the fall in the broad Brazlian benchmark index, the BOVESPA has fallen 20%+ this year, however Batista’s companies occupy top three positions in the index amongst the losers led by OGX (-) 88%, MMX (-) 68% and LLX (-) 67%. His oil&gas exploration company seems to have been the worst hit what with crude oil production @ 0.015 mbpd against initial estimates of 0.7 mbpd by 2015. There were media reports of him selling upto 40% stake in one of his oil blocks to the Malaysian Petronas. Another of his companies, LLX, is building a port, Acu Superport. It is facing labour troubles and some structural problems with the port design.

Forbes describes his persona here http://www.forbes.com/sites/kenrapoza/2013/07/30/eike-batista-brazils-biggest-loser/ calling him humble and philanthropic, also helping to bring the Olympics to Brazil (2016 summer olympics are to be held in Rio).

With valuations of his commodity driven companies crashing down, Batista regrets listing his companies on the stock markets, and says that in retrospect a private equity model of financing his ventures would have been more suitable.

Found this quote useful to describe the situation “people were basically investing in a PowerPoint presentation. He’s very charismatic. I’ve seen him on road shows and he definitely lights up a room when he walks in. But he doesn’t have the credibility he used to.” Running businesses is not about PPT, there are such Indian examples too. That would be the topic of another of MidnightBreakfast posts.

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