Professional Documents
Culture Documents
The Story of Man From Billionaire To Bust
The Story of Man From Billionaire To Bust
Bavaguthu Raghuram Shetty was once a typical billionaire with a taste for the high-life.
He splurged on a private jet, vintage cars and two entire floors of the Burj Khalifa, the world’s
tallest skyscraper. His website shows him hobnobbing with politicians, Bill Gates and
Bollywood royalty.
“The thrill of speed and freedom makes me love cars," Shetty, 77, told local reporters last year.
Shetty had more than enough money -- at least on paper -- to afford such a lifestyle from
companies he helped found, including hospital operator NMC Health Plc and financial services
firm Finablr Plc. His stakes in the public companies were valued at $2.4 billion, making up the
bulk of a fortune spanning education, hospitality and one of the world’s oldest tea companies.
Block’s investment firm, Muddy Waters, issued a report criticizing NMC’s accounts and
disclosing a short position. Since then, Muddy Waters’s scrutiny has snowballed into a troubling
scenario for Shetty that sheds light on his complex share arrangements and casts doubts about his
net worth. Filings this month show that Shetty pledged a quarter of his NMC stake against loans
with First Abu Dhabi Bank and Zurich-based Falcon Private Bank. Two other shareholders may
own half of his reported stake. Another lender -- Al Salam Bank Bahrain -- has already sold
some of those shares to enforce security over a loan for Shetty, and NMC said that First Abu
Dhabi Bank sold another.
The situation “seems to have gone beyond some of the issues that Muddy Waters focused on
initially,“ said Gavin Launder, a fund manager at Legal & General Investment Management, who
owned shares in NMC until October. “The increased scrutiny has unearthed other issues." Law
firm Herbert Smith Freehills has launched a review of Shetty’s holdings at his request, a
spokesperson for the Indian-born businessman said, declining to comment further until the
analysis is completed. Shetty resigned as NMC’s chairman.
Report on NMC, Muddy Waters hinted at potential overpayment for assets, inflated cash
balances and understated debt. Shares of the United Arab Emirates’ biggest private health-care
provider have since plunged more than 67%, and the firm is now the focus of takeover
speculation. The sell-off also spread to Finablr (UAE based Indian billionaire BR Shetty's
Finablr Plc is selling its business to an Israeli UAE consortium for just $1, capping the collapse
of a business that had a market value of 1.5 billion pounds ($2 billion) merely 12 months ago)
NMC has disputed Muddy Waters’s claims, and the company hired former FBI Director Louis
Freeh to conduct an independent review of the short seller’s allegations. Meanwhile, local
regulators “are making inquiries with the relevant parties," a spokesperson for the U.K.’s
Financial Conduct Authority said.
Shetty is hardly the only ultra-wealthy person to leverage his assets. Elon Musk has used his
shares in Tesla Inc. to obtain personal loans, while Oracle Corp. Chairman Larry Ellison has put
up millions of the company’s shares to fund a lavish lifestyle that includes trophy properties,
America’s Cup teams and the Indian Wells tennis facility in California.
But such deals can also sour, as demonstrated by Shetty’s lenders selling shares his investment
firm pledged. He and his advisers are investigating details of the sales as part of their legal
review, according to filings.
To complicate matters, Shetty pledged another batch of NMC stock in 2018 as part of a so-called
equity collar arrangement with Goldman Sachs Group Inc. that uses options to limit the impact
from share moves. Last month, he also pledged most of his stake in Finablr to refinance a loan
from the company’s takeover of foreign-exchange firm Travelex for about $1.2 billion.
BRS Ventures Investment, the UAE-based holding company for most of Shetty’s assets, doesn’t
report consolidated financials, preventing a complete analysis of his net worth. His other assets
include a catering company, a waste-management firm and pharmaceutical business Neopharma,
which four months ago was in the early stages of planning for an initial public offering.
Block, 43, earned his reputation as a short seller a decade ago through targeting U.S.-listed
Chinese companies that he claimed were frauds. More recently, his San Francisco-based firm
focused on British litigation-finance firm Burford Capital Ltd. and Japanese biotech stock
PeptiDream Inc. Short sellers seek to benefit from a decline in a company’s share price.
Shetty founded NMC in 1975 after moving to Abu Dhabi from his native India. He created
Finablr two years ago to consolidate his financial brands before listing it on the London Stock
Exchange in 2019.
Block said he didn’t anticipate NMC’s shareholding drama.
“I wouldn’t have been able to predict that we’d get these bizarre disclosures about unclear share
ownership coming out of the company, this has been obviously a more dramatic unraveling than
we usually see.”