Reality check for Brazil billionaire

SAO PAULO, BRAZIL -- For a man who had just lost $6 billion in less than 24 hours, Eike Batista was curiously upbeat. Brazil’s richest man took to Twitter, as he is wont to do, to send a message to his almost 1 million followers.

“My fortune is in my assets, and since I didn’t sell a single share, I didn’t lose anything!” he tweeted early this month.

Yes, it’s true that the stock prices of his companies in oil, mining, gas and infrastructure could come back up. But it was their market value that until recently kept Batista at No. 7 on the Forbes list of the world’s richest people, a position he relished. He was in the habit of telling reporters he would become the world’s wealthiest man, preferably as soon as possible.

Batista is not a man prone to understatement, especially when it comes to talking about himself. The champion speedboat racer and former husband of a Playboy model put out a book this year titled: “The X Factor: The Path of Brazil’s Greatest Entrepreneur.”

For the last few years, the tycoon with the boyish smile and clinically enhanced hair has been a self-appointed symbol of the seemingly boundless optimism and riches that have accompanied Brazil’s spectacular growth as he and others cashed in on its vast natural resources. Cultivating an over-the-top billionaire playboy persona, the 55-year-old has remade parts of Rio de Janeiro to his liking and promoted Ultimate Fighting Championship events. He has famously kept a million-dollar Mercedes-Benz SLR McLaren in his living room.


But over the last few months, as fleeing investors sucked away almost half of his $30-billion fortune, he has also become a potent symbol of Brazil’s economic reality check, as growth slows in Latin America’s largest economy, and investors become less credulous and more cautious.

“Since 2007, Brazil has been living through this euphoric moment, and Eike used that to create exaggerated expectations,” said analyst Adriano Pires, director of the Brazilian Infrastructure Center, an energy consulting firm in Rio de Janeiro.

“What’s happened [to Batista] is an alert signal, to be sure,” he said. “We’re entering a period of less euphoria and more reality.”

Life for the ordinary Brazilian is still better than ever: Unemployment is low, and wages have risen this year. But the kind of high-flying miraculous transformations that Batista represents have stalled, especially those that rely on the stock market or the ability to quickly get Brazil’s newly discovered oil out from below the ocean.

Brazil’s economy has slowed almost to a halt in recent months after powering forward for most of the last decade. Both the stock market and Petrobas, the state-controlled oil company, have had tough years. But these paled in comparison with Batista’s dramatic drop from the dizzying heights he had so quickly reached.

After his oil company, OGX, announced that its wells would be producing far less than previously promised, it lost 40% of its value in two days in late June, the biggest drop in the history of Sao Paulo’s stock exchange.

Pires said Batista’s personality, and his get-everything-and-get-it-now approach to running a business, may have contributed to the steepness of the drop.

“He’s always promoting himself, he’s always saying he’s going to be the richest man in the world, and that doesn’t help,” Pires said. “It ended up creating distaste for him, that he kept saying these things that don’t inspire much sympathy.

“A lot of people don’t like that attitude,” he said, adding that in the long term, Batista’s businesses, like Brazil, probably would end up performing fairly well, somewhere between the recent pessimism and the overblown expectations that preceded it.

It’s certainly true that few Brazilians’ personality and influence are more widely felt than Batista’s. He invites journalists into his mansion, onto his private helicopter for a tour of the city and loads them onto his yacht for Christmas celebrations. When questioned about his appearance, he freely acknowledges that he has had work done on his eyelids, and that his hair is the result of an expensive implant treatment.

In larger-than-life style, he donated millions to the city’s successful campaign for the 2016 Olympics, and has set about investing in refurbishing hotels and preparing venues.

In interviews, he tends to gleefully recount his successes and the good he is doing for Brazil.

“What might be an adventure for you, isn’t for me anymore. Because I’ve already been there,” he said last year on the Brazilian equivalent of “The Tonight Show.”

But misadventures have been more common lately. This has been a tough year for Batista not only on the financial front. In March, his 20-year-old son, Thor, struck and killed a cyclist while driving the famous Mercedes (yes, the one on display in the living room), sparking a debate over income inequality in Brazil and the appropriateness of his father’s response.

Although he didn’t witness the crash, Batista promptly took to Twitter to claim that the “carelessness” of the dead cyclist, Wanderson Pereira dos Santos, could have taken the life of Thor Batista and his friend. Thor Batista faces manslaughter charges.

Inequality has diminished somewhat in Brazil recently, but men such as Pereira dos Santos and Thor Batista still have very different lives. One worked unloading trucks, lived in a shack, and was forced to use a dangerous highway to fetch flour. Batista’s son had preferred to spend his time bodybuilding, club-hopping on jets, and learning about finance close to home. He said the first book he ever read was his father’s.

Eike Batista did not exactly have humble beginnings either. His father, Eliezer Batista, led one of the country’s most important companies and served as minister of mines and energy. Eike Batista denies, however, that those contacts helped him establish his wildly successful gold mining operation, or get his start in tapping Brazil’s newly discovered offshore oil wealth.

OGX began pumping oil only this year, and Batista has made most of his recent billions by launching IPOs for six companies, raising capital on promises of far-off profits, a model that worked out even better for him than for Facebook founder Mark Zuckerberg, the Economist has pointed out.

Uncharacteristically clamming up, Batista declined to be interviewed for this article, but his media team pointed The Times to a recent interview he did with Exame, a local business magazine, in which he says investors had overreacted.

“All of my companies are financed. Talking about bankruptcy is just not appropriate,” he said. “I like to say my businesses are idiot-proof.... They can handle plenty of abuse.”


Bevins is a special correspondent.