Feb 19: 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. On Dec. 10, 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.
Then, a week later, Carson Block came along.
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. His holdings in Finablr and NMC are worth $885 million, but Shetty’s fortune may now be just a fraction of that, depending on the size of his borrowings.
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 Tuesday that First Abu Dhabi Bank sold another chunk earlier this month.
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 Sunday as NMC’s chairman.
In its Dec. 17 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 67%, and the firm is now the focus of takeover speculation. The sell-off also spread to Finablr, whose stock has tumbled 64% in that span.
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,” he said in a Feb. 13 phone interview. “This has been obviously a more dramatic unraveling than we usually see.”
The firm had said his life would change if he made “architectural corrections” to his house by spending lakhs of rupees.
Comments
number 1 fraud cheating waste of money stop beliveing
Television channels shuld be dragged to court by relaying such gimmicks programmes
This era is specialized for fake Swamis, Gurus, Babas, fortune tellers, Vastu specialists and so on.
We have seen thousands of structures constructed before without any Vastu still they stand intact for hundreds of years. In TV chennels they broadcast vastu and fortunes at the expenses of viewers. Chandra Shekar guru a fraudester fooling the public, consultation fee is only 500/- then he charges exorbitantly to his shishyas are trapped in Vastu. This is nothing but a cheating and Section 420 and other CPC to be leveled on this fake guru.
I am surprised why State Government is dilly dallying to bring the legislation on superstition and give permanent full stop for these Gurus, Swamis, and Babes.
Unfortunately, even in this advanced scientific era, people get betrayed.
How can be luck is related to stars and date of birth. No common science will accept where as this so called Guru claims his vastu is scientific.
Why other educated people are not raising their concern on unethical practices by such self proclaimed guru/priests/Swamees.
Secondly there are many TV channels are telecasting the program with live interviews.
He is using Suvarna News. there are horoscope readers in Asia Net Malayalam channel .
This man asks the customer - what is your date of birth. Then he gives so called VASTU consultancy, and asks them to change the direction of door, etc.
Thanks to God Islam outright condemns fortune telling and horoscope reading.
Horoscopes are preventing many a times potential couples from marrying telling them their marriage life will not be successful as their birth date and stars are not matching.
make ur mind and heart clear ... everything wil be fine ... they are all fraud and money maker ,.
they fooled many people first they will tell sarala vastu its free service and after getting the appointment they will call us and ask us to deposit 10000. after reaching to your place all their expenses have to be paid by the customer. totally proud telecasting Zee Kannada Channel should be banned,
No. 1 fraud
Number one fraud.
First we have to ban the channels in which this was shown, channels only want trp, after that people lose their money on putting on them,
everyday new new swamijis are taking birth and making fools out of people, their targets are only poor people and greedy ones.
from the first day i was telling with my mom about him, this will be a big fraud, and the truth s here.
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