How the World’s 8th Richest Man Lost 99.6% of His Fortune
And went to live a few meters away from murderers and kidnappers.
Levi Borba
Levi Borba
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Jan 28 · 5 min read
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Photo by Fernando Frazão/Agência Brasil
Billionaires from emerging countries appear in the headlines more often than their low-profile European counterparts. From the disappearance of the Chinese magnate Jack Ma to a Saudi Royal riding with a Cheetah in his golden Mercedes, it’s easy to find weird stories about individuals with more money than a person can spend in a lifetime.
But no story is as impressive as Eike Batista’s; a man who lost 99.6% of his fortune in only 16 months. A tycoon that pulverized 34 billion dollars in under a year and a half. An industrialist who rubbed shoulders with presidents and ministers, but now lives among dangerous criminals.
Rewind to the golden years
In 1981, 25-year-old Eike took a $500 thousand loan and created Autram Aurem, a gold-dealing company based on Amazonian mining activities. There are rumors he used his father’s expertise; he served as minister of Energy & Mining affairs in the Brazilian government. In less than two years, Eike made a 6 million dollar profit.
The quick expansion of the Amazonian business attracted interest from other countries, and in 1983, Eike associated with the Canadian company TVX Gold. Two years later he became the CEO of this same organization, already listed on the Canadian stock exchange.
At just 29 years old, he had built the stage he needed to showcase his extraordinary ability to impress investors. And Eike liked having the stage to himself.
As if being an under-30 CEO wasn’t enough to fill the spotlight, Eike went on to marry a P******-cover model. With her, he had his first son, Thor, and the names of Nordic Gods remained a constant in his life, since he also named his youngest kid Balder. Eike also developed an athletic career, becoming a speedboat world-champion.
It looked like everything he touched, every step he gave, was always in the path of unavoidable success.
The Grupo X
In 1998, Eike created the first of a series of companies that would later form his mammoth conglomerate: AMX, a water sewage treating company, founded after buying the structure of an older firm. In this same year, his name appeared on televisions all over Brazil (and the world) in relation to a very different affair. His celebrity wife, while dressed as a cat during a carnival parade, used a leash written Eike.
The next enterprises Eike founded were MPX (thermal energy sector, 2001), MMX (mining, 2005), OGX (oil and gas, 2007), LLX (logistics, 2007), REX (real estate, 2008), OSX (shipyard, 2009) and SIX (technology, 2011).
All of these companies were controlled by a holding called EBX. Almost all of his creations had IPOs, and every IPO multiplied his fortune. Instead of the typical investor-relations directors, Eike embraced road-shows and often met with the public.
He had started developing his commercial abilities long before. As a college student, he sold insurance policies to fund studies in Europe. From these early days, he knew his selling skills worked like magic.
The IPO frenzy
Using his Matthew McConaughey tone of voice, his Hollywood-worthy appearance, impressive business plans and his Midas-touch, Eike drew in investors with ease. He even convinced people who had never invested in stocks to open accounts just to buy his shares.
Those without enough to invest in his enterprises, contented in buying his book, subtitled The trajectory of the greatest entrepreneur in Brazil.
The Brazilian brokerage house XP Investimentos saw an incredible flow of new customers during this period, taking them from a regional investment boutique, to one of the largest retail investment companies in the world.
I was an XP stockbroker from 2009 to 2011. The number of people opening accounts to invest in Eike Batista was so overwhelming that our back-office started to take days to process all the forms. The same was happening all over Brazil.
After every IPO, the fortune of Eike Batista expanded. And it didn’t stop with that. He mastered the use of press releases to notify the public with updates about his drilling companies finding new oil fields, or his shipping company signing new contracts. Mentions to business-risks were rare.
I remember our team manager at the brokerage house saying:
How incredible is this OGX! Every time they drill, they find something! It will soon turn into a global giant!
But it didn’t. Oh, it definitely didn’t.
The Lava-Jato operation and a meteoric downfall.
The prelude to Eike’s downfall happened in March 2012 when his son Thor ran over a cyclist while driving a Mclaren SLR.
In the same year, investors grew impatient with his group’s performance. MPX was accumulating debts and losses. The star of his conglomerate, OGX, coming from years of overly optimistic press-releases, still had negligible oil extraction numbers.
Eike needed to resort to selling assets from some of the companies to cover the losses in others. But a few months later came a bomb he couldn’t handle.
OGX’s oil fields were of such poor quality that extraction wasn’t worthwhile. His fortune dropped almost 7 billion dollars in a single day.
From then on, it was a constant and steep downhill journey. Four different crime investigations targeted Eike — one of them ironically named by the Federal Police as Midas Touch.
The last nail in the coffin was the Lava Jato operation. If you already watched the Netflix series The Mechanism, you know that this was the investigation that jailed the Brazilian former president Lula and the Rio de Janeiro State Governor Sérgio Cabral.
Lava Jato investigated private companies who had formed close ties with government officials by paying bribes for public contracts and other benefits. The investigators discovered Eike was one of the magnates who had benefitted from bribing politicians. A parallel investigation was about insider trading — no surprise here.
Brazilian justice is painfully slow: only in 2017 did the court issue an arrest sentence against Eike Batista. But they could not find him. For days they considered the former billionaire a fugitive, until he surrendered at Rio de Janeiro International Airport.
In January 2017, Eike Batista, with his head shaved like any other prisoner, started to serve his jail sentence at the Bangu penitentiary complex, a habitat of thousands of common criminals, ranging from shoplifters to psychopathic drug lords.
It was the end of the Brazilian Midas, but the desperate cries from the small investors who were lured by him and his media coverage can still be heard.
Medium
Me: You only need 1 million Bucks to have a great life, without needing to invest in anything dodgy and the interest will always be the icing on the cake. Anyone with more than 1 million needs their head read, if they try to get more and more money. How much is enough. What about living life for pleasures sake and enjoy the fruits of life rather than risking everything on the throw of the dice. I am, I do and life is great, just came a bit late in life, that’s all. I recommend living without needing to be concerned where the next dollar is coming from to pay an outstanding bill – been there, done that, too many times, just like most of you!!