What's up guys and welcome to wall street millennial on this channel, we cover everything related to stocks and investing today, we're covering the insane rise and fall of ike batista batista was a brazilian mining and oil tycoon, whose net worth reached a peak of 35 billion dollars. In 2011., he founded the ebx group, which was an industrial powerhouse in brazil throughout the 2000s and early 2010s bloomberg ranked him among the top 50 most influential people in global finance that year, thanks for looking up for batista with 35 billion dollars, he was the richest Man in brazil by far in the eighth richest man in the world. However, in just two years, his entire business empire came crumbling down. His net worth declined more than 100 from 35 billion dollars to less than zero.

He now faces 30 years in prison on corruption. Charges in this video we'll go over, who ike batista is how he built up his 35 billion dollar mining and oil empire and how it came crumbling down in epic fashion. Ike was born in brazil in 1956. From a young age, he had exposure to the country's mining industry.

His father, elizir batista was the minister of mines and energy for the brazilian state of jiao gular, as well as the president of state-owned mining company vale inc in 1974. He left for germany, where he studied metallurgical engineering at the university of aitkin after graduating. He moved back to brazil where he started working in the mining industry as a salesman. He contacted gold and diamond miners in brazil's remote amazon regions and connected them to wealthy buyers.

In metropolitan areas of brazil, as well as foreign countries, he was very good at finding golden diamond fresh from mines at cheap prices. This allowed him to quickly make a name for himself in brazil's thriving precious metals industry in 1979, when ike was just 23 years old. He started his own gold trading firm, which he named altrim aurum. One year later, he sold the business for six million dollars.

He took those profits and started his own mining company ebx. He invested in state-of-the-art machinery and created the first ever alluvial gold mining plant. In the amazon region, alluvial gold mining is the process of sifting gold out of creeks and rivers. At the time, the amazon had vast amounts of untapped gold in its waterways.

Ike made huge profits by mining. The gold in this new system ike, reinvested the profits and raised money through debt financing to fund the expansion of ebx. He built new mines in brazil, canada and chile. He also expanded vertically into other industries.

He created subsidiaries, ccx, which did coal mining mmx, which did metals mining ogx, which did oil and gas drilling and finally, os x, which did shipping and offshore logistics each subsidiary was listed separately on the brazilian stock exchange. Every subsidiary had the letter x at the end. As batista thought, the letter x represents the multiplication of wealth. Initially, these businesses worked out quite well.

Throughout the 2000s, the price of gold steadily increased. This was massively beneficial to ebx, as gold mining was their main business. On the backdrop of high gold prices, ike was able to borrow tens of billions of dollars through debt financing from the public markets to fund evx's growth of ebx's subsidiaries. Ogx, the oil and gas extraction company was the most significant.

In 2007, brazil's state-owned oil exploration company petrol ross found massive new offshore oil reserves off the coast of rio de janeiro. This was a massive find that promised to turn brazil into a global oil powerhouse. Initial estimates measured these new oil fields, as the third biggest in the world batista, saw this as an opportunity, and just a month after the discovery was announced, he started his new company ogx to take advantage of the offshore oil given batista's strong track record in the Gold mining industry investors were more than willing to fund his project. He raised 1.3 billion dollars in private investments in 2007 and an additional 4.1 billion dollars in 2008 in a blockbuster ipo.

This ipo was the biggest in brazil's history. At the time this 5.4 billion dollars of investments came before ogx had produced a single drop of oil. The company had a public market valuation of roughly 45 billion dollars at the peak. He used this money to buy the rights to newly discovered offshore oil blocks from the brazilian government.

He hired former petrobras ceo francisco gross to be in charge of ogx's operations. This high profile hire gave investors confidence that ogx could succeed at developing these untapped oil reserves. They made some exploratory welds to test how much oil was in these patches in 2010. They claimed 90 of the exploration well successfully found oil and they estimated the total value of the oil reserves at 1 trillion.

At the time, oil prices were also on a tear on the back of strong demand from china and supply constraint from opec. This greatly benefited ogx. These favorable commodity price movements sent ebx's companies to the moon in 2011. Ike batista staking his companies was worth an estimated 35 billion dollars, making him the richest man in brazil and the eighth richest man in the world.

He was very confident in his companies and told forbes magazine that he would become the world's richest man by 2015.. However, in 2012, things started to fall apart. The price of gold started to decline from its peak the declines weren't that massive but ebx took on so much debt, assuming gold would continue increasing with gold decreasing. They were not able to make their interest payments even more problematic than the falling gold price was batista's ogx oil company.

They had claimed that they would produce 750 000 barrels of oil per day, as it turns out. They grossly overestimated the oil reserves and in 2013 they were only producing 15 000 2 percent of their projected output. This revelation caused ogx's share price to fall by more than 91 percent in 2013., with such meager production, ogx was not able to make interest payments on its 5 billion debt load and was forced to declare bankruptcy in 2013.. This rendered the equity worthless his other companies.

Faced similar hardships as they were burdened with excessive debt and brazil's economy was slowing. Batista's shipping company osx declined in value by more than 99 from the peak is now a worthless penny stock. All the share prices of the ebx subsidiaries were going close to zero. This completely wiped out batista's 35 billion dollar net worth unable to pay his debts.

Police raided batista's home, seizing his luxury assets, including his lamborghini aventador in 2015.. He was also criminally charged with insider trading. He allegedly stole 85 million dollars of company stock when he discovered ogx's offshore fields would miss production forecasts, given his debts and legal liabilities. His net worth is now estimated to be negative, 1.2 billion dollars and batista's legal troubles were about to get even worse.

In 2017. Brazilian authorities issued a warrant for his arrest relating to his involvement in a bribery scandal. Batista paid 16 million to rio state governor sergio cabral sergio in exchange awarded batista's companies lucrative government contracts at above market rates. Batista's arrest was part of the broad corruption probe called operation car wash operation.

Car wash was a crackdown on corruption, which saw more than one thousand arrests of government officials and business executives. Ike then fled to new york in an attempt to evade capture. Unfortunately, the u.s and brazil have an extradition treaty, so u.s authorities apprehended him and handed him over to brazilian police in 2018 batista was convicted and sentenced to a 30-year jail sentence. This will likely be a life imprisonment, as he would be over 90 years old.

At the time of his release, the story of ike batista is a truly sobering tale. He went from a billionaire to an inmate in the span of just a few years. His initial success with gold mining in the amazon was incredibly impressive. Had he continued to build more gold mines at a moderate pace without taking on too much debt, he would likely still be a billionaire.

Today, however, he got greedy and wanted to become the world's richest man. His early success gave him hubris and he thought that he could be successful in any venture. He took on this motivated him to create new subsidiaries in areas that he had. No expertise in, as investor expectations grew.

He was forced to exaggerate his company's prospects to justify their skyrocketing share prices. He also resorted to corruption in an attempt to reach his overly ambitious growth targets. The epic fall of evx is a cautionary tale about what happens when a business expands too aggressively and takes on too much debt. Alright guys that wraps it up for this video, if you like the content, make sure to smash that like button and subscribe for future videos also make sure to check out our second channel wsm research, where we post dd on high growth stocks.

As always. Thank you guys so much for watching and we'll see you the next one wall street millennial, signing out.