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.”
Comments
What is ur problem Mr ,go and do ur business don't interfere in our rights.
Someone must check Christina's adhar card sorry, ur id card Whether she Indian or not.
For my sisters you don't go to such college you can go to Madarasha it's best for you in this life and hereafter best education where you get .for the principal first change ur name.
why you send muslim girls to clg.. let them sit at home and help your parents problem is slowed. PFI brother dont waste your time and do not encourage
why muslim girls students using mobile can you stop tiz some of our muslim girl students roaming inside city centre can you stop tiz mybrother
go and wacth inside city centre on friday after many our commuinty student weariing hijab and roaming with their boy friend kindly try to stop tiz
I request the principles sister to were a normal dress insted of religious dress she is wearing , let her be an example for the rules she has set.
I am asking now only muslims wake up when any some so called muslims their marriges arraenging in this christhian churches why? in mangalore no muslim marrige halls ? these all are only for gimik. The college was against the sharia simply, change the college why this college only. if done like this this kind of all colleges they learn lesson .
Their marriage halls we have issue their they cooking haram things & we also cooking hallal then we no problem, because this all our dignity .throw your dignity follow Quran & Sunnah and became original muslim
If clg rules are against democracy we hv to chnge clg rules not our rights.
When injustice becomes law be on the side of justice
thn islam is peace & beautiful bt the systems are against islam thn this islam also hv certain stratagy & thts thought by prophet (s.a)
Secular? If right to cover the head is not secular for you, then there are million christians/hindu women out there wearing head scarfs including former President Prathiba Patil. So, you mean to say that they all cannot have education in India?
Ughhhhh. Individual choice yes. But college has certain rules. You don't want to follow the rules, you don't join that particular college. Also, Islam is a very beautiful religion. Let's not make it all about the Hijab.
100% they are Indians as they are fighting for their rights which is guaranteed by INDIAN CONSTITUTION. Now could you pls chek your voter ID and of the Principal who made rules against the constitution which is legally termed as Anti-Indian rule.
How can this Principal wearing head scarf frame college laws which is against to the constitution of India. Why she is allowing her sibling nuns wearing Hijab like dress and head scarf attend classes in the same college? What is her hidden agenda? How can she justify her draconian dictat??
Someone must check the voter IDs of protesters to find out whether they are really Indians
Why do these bigots go to a secular college if they want Taliban rules?
At one side head of the institutions are wearing head scarf and allowing Christion nuns whose dress code includes head scarf to follow their tradition. On the other side they are objecting Muslim girls to wear head scarf which is similar as their scarf. May I call it as #hypocrisy
Please decent girls don’t go to that college.
Students all are equal in the college
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