Eike Batista has been on the most extreme financial roller coaster you could ever imagine. Actually, it is doubtful that anyone but Batista could truly understand the financial highs and lows he has experienced over the past few years.
Eike, a Brazilian entrepreneur, built an empire of companies that resulted in a net worth of $30 billion by early 2012, which reportedly made him the seventh-wealthiest person on the planet. However, in late 2014, Batista admitted that his net worth had shrunk to roughly negative one billion dollars, a feat virtually no one else could accomplish. How could a businessman fall from the lofty height of being one of the richest men in the world, down to being one of the poorest people on the planet, if not the poorest?
How Eike Batista Grew His Fortune
Eike began to grow his wealth in the gold industry. He founded a gold trading company, Autram Aurem, in 1996, and the company quickly earned six million dollars. Later, he founded a gold mining company that was the first to implement a very specific method of precious metal mining in the Amazon. In total, Batista has founded eight gold mines located in Brazil and Canada, three iron ore mines in Brazil and one silver mine located in Chile. Batista then expanded into another five companies in the fields of mining, energy, oil, logistics and offshore shipbuilding.
How the Tides Turned to Result in Massive Debt
Unfortunately for Batista, many of his companies were heavily involved in the commodities business. When the commodity markets started to turn south in 2013, many of his firms were no longer able to operate profitably.
In addition to a decline in commodity prices, Batista’s oil company (OGX) was never able to produce anywhere near the estimated 750,000 barrels of oil they initially predicted. Instead, they were only able to produce a pathetic 15,000 barrels of oil a day, or two percent of forecasted production.
Such a gross error in estimates would be enough to destroy any company and it continued the acceleration of Batista’s loss of wealth. The combination of these events, along with other similar problems, eroded Batista’s net worth to the negative one billion dollars it stands at today.
Batista’s Assets Seized
On February 9th, 2015, Batista had several assets seized on a court order by Brazilian federal judge Flavio Roberto de Souza in connection with a pending case of insider trading. The case involves Batista being accused of selling $85 million of stock based on information not available to the public at the time of the sale. The seized assets included a Lamborghini super car along with six other vehicles owned by Batista, $33,000 in cash, and his cell phone. The Brazilian court also seized his boat, airplanes and real estate valued at roughly $540 million.
In addition, the court ordered seizure of financial assets belonging to two of his three children, the mother of his third child and his former wife, since they all may have benefited from money linked to the accused illegal insider trading.
Batista’s spectacular downward financial spiral is a one–of-a-kind story that may not be repeated anytime in the near future. Although on paper he may be the poorest person on the planet, we reckon he is living a better lifestyle than most of the planet.