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 protesters, who gathered near the Sanskrit College Circle here, raised slogans glorifying Vishvesha Tirtha Swamiji of Pejawar Mutt and slammed the Dalit leaders, who raised voice against him.
Comments
Why is Pejawar seer, BJP and RSS hiding behind these sold out , so-called Muslims. why can't they come out on their own?
This is amusing. First ask pejawar seer why he keeps endorsing all the abuses and threats against the Muslims community during the \Hindu samajotsavas\" where he's the main organiser. Pejawar seer is the leading light of the VHP and Bajrang Dal. Please ask him to tell his group the VHP and Bajrang Dal to stop killing and raping Muslims (nowadays in the name of beef as well), then he can ask for their support. Thank you"
These are Muslims just in name. We need to know how much BJP & RSS has promised to give them for this publicity stunt. pejawar is behind the growth of the RSS and BD in the region, that has made life of Muslims miserable, and think they are 2nd class citizens. He was a leading light of the Babri demolition, and also behind the gau rakshaks who beat up and kill muslim traders . Instead of hiding behind these 'Muslims for rent', BJP and RSS should \protect\" Pejawar themselves, if they have any shame"
oh
Abdullah told good answer
Members of Udupi District Muslim Souharda Vedike (Bunch of Jokers in Udupi) , first of all you people protect yourself then talk about protecting the temple.
One of your hardcore Member (ANSAR) he himself is a THIEF, he had stolen gold at his own home in 2003, his father registered complaint in Udupi town police station. after investigation police arrested him.
Who is this Arif. Is he representative of Muslim community. I think such people led the protesters of sangh parivar to pelt stones to Masjids and shops/houses belongs to Muslims. I hope these ppl gave information to sangh parivars aboutthe Muslims who sacrifice animals. Is he really Arif and only a name given by sangh parivar to divide muslim community.
Muslims got high respect on Shri Krishna Matt . One should not cause any harm to mutt. Shri Pejawar Swamiji had gone all along from Udupi to Ayodhya to destroy the Babri Masjid.
Please dont call Muslims ... Call MRM sold outs... to cheddis
This Swamiji motivated the terrorist goons to demolish 5 century old Babri Masjid. thereby destroyed secularism in India. now needs the support of bone-licking munafiks
Let those mutt swamis chelas protect it....why muslims....go and protect yourself...from hell fire.....
Pejawar seer is known as as a hardcore advocate of RSS
well done. Thank you for staging protest and showing solidarity.. let's unite for good cause.
Dear Muslim Brother's.
First protect yourself from Hell fire.Later you can think of protecting other's. First learn about Islam then advise your Pejawar Sree about Islam and life after death.
Fear ALLAH,Obey Prophet Muhammed(pbuh).
It is a plan of pejawara.
his mutt has given some money to non practicing muslims (only name is muslim).
He want to devide dalits and muslims.
Mr. Arif how can say muslim community would be there to protect the thieves!!!???
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