Self-Made Billionaire with Controlling Interests in Shipping, Offshore Oil Rigs and Fish Farming; Strong Believer in Dividend Income
John Fredriksen is a Norwegian-born, self-made billionaire (#49 on Bloomberg Billionaires) who rose from humble roots and made his first fortune in oil shipping, then used that as a launching pad into a host of other ventures such as offshore oil rigs and marine fish farming. Fredriksen has a net worth of about $16 billion (as of August 2014) primarily through equity stakes in at least fifteen publicly-traded companies that he founded or acquired. He is widely respected for his business acumen and influence in the marine and offshore sectors.
He is actively involved in selective charities, especially after his wife, Inger Astrup Fredriksen, passed away from cancer in 2006 leaving behind John and their two twin daughters, Cecilie and Kathrine Astrup Fredriksen, who were born on September 29, 1983 in London, which is where Fredriksen primarily resides.
He’s variously called the Viking King, Big Wolf and Big John in shipping circles. People close to him say he’s a rough businessman who does things based more on his gut than detailed analysis. He’s a very private man who shuns the media and likes to engage in fly-fishing and soccer in his free time.
Fredriksen was born on May 10, 1944, and was raised in Oslo, Norway, the son of a blue collar welder. After he finished high school, he joined a ship-broking company as an apprentice courier, and started trading oil while he was still in his teens. Then, at the relatively young age of 27, he bought his first oil tanker and got his start in the shipping industry.
Heavy Focus on Dividends
Fredriksen’s equity stake in Seadrill alone pays him about $400 million in dividends each year. To avoid paying high taxes in Norway, Fredriksen gave up his Norwegian citizenship in 2006 and became a citizen of Greece, based in Cyprus where dividends are not taxed. As a result, many of Fredriksen’s companies pay higher dividend yields than their peers and are known to steadily grow dividends year after year (note steady Seadrill dividend growth in chart below).
Seadrill, his biggest holding, has a dividend yield of 10.7% (as of 8/29/2014) while Marine Harvest pays out 10.2% annually. Many industry analysts believe dividend investors could safely focus on Fredriksen’s main holdings to receive substantial dividend income.
Fredriksen’s portfolio companies deliver high dividend payouts by partly relying on leverage, with prudent debt financing for capital-intensive projects such as newbuilds. His companies have fairly easy access to debt capital markets because of their strong focus on health, safety and the environment (HSE), a modern fleet, industry leadership in winning new contracts and solid cash flow.
Net Worth of About $16 Billion
Today, Fredriksen’s companies have a collective market capitalization of over $52 billion, in which he owns stakes worth about $11 billion (as of August 29, 2014). With estimated cash holdings of about $3 billion, Fredriksen’s cash and
net worth is estimated at about $14 billion.
Fredriksen owns his equity stakes primarily through holding companies such as Hemen Holdings, World Shipholding, Farahead Holdings, Geveran Trading and Monteray Enterprises. His top five holdings (by market value) include Seadrill, Golar LNG, Marine Harvest, Frontline 2012 and Arcadia Petroleum – and account for about 94% of the total market value of his equity holdings. Most of his companies are listed on the Oslo stock exchange (OSE) in Norway with selective listings on the NYSE and the NASDAQ.
In addition, he is estimated to have about $4.6 billion in cash, $260 million in real-estate holdings (of which his London property, the Old Rectory, is estimated at over $200 million and is a crown jewel in the tony Chelsea neighborhood) and a substantial amount in other assets such as his private Gulfstream G550 jet and a valuable art collection. His combined net worth from all assets is estimated at about $16 billion.
Lean, Efficient Management Style
Fredriksen typically holds controlling stakes in his companies and takes on the Chairman role, with virtually full control over key business decisions such as strategy, financing, business structure, dividend payouts and key hires. His boards are small, hand-picked and efficient, with Directors that bring substantial operating knowledge and key contacts to his businesses, and allow Fredriksen to direct the company towards maximizing shareholder value.
His companies typically have lean management teams with little corporate overhead or bureaucracy, with some administrative tasks outsourced to third parties. Fredriksen and Troim are also respected for their quick decision-making, without lengthy board meetings or shareholder approval cycles, a trait that has served him well on acquisitions.
Early Business Success Rooted in Risk Taking
His first break came when he bought out long-term charters during Israel’s Yom Kippur War that brought instability to the Middle East in 1973. Fredriksen made about $40 million when prices bounced back six years later.
His next big break came with the Iran-Iraq war that began in September 1980, when Fredriksen saw opportunity, albeit at very high risk, in helping Iran finance its war by ferrying Iranian oil to Syria. Frediksen jumped in where others feared attacks on their fleet and reaped huge profits.
In 1986, he was briefly jailed for four months by the Norwegian government for alleged improprieties, endangering his crew and insurance fraud but settled the charges without accepting wrongdoing on his part.
Flush with cash from his Iran operations, he continued to add to his fleet after the Iran-Iraq war by buying vessels from competitors. He founded Frontline Limited in the 1990s and grew it into the largest oil tanker owner in the world. He then used Frontline as a jumping block to start other companies – Deep Sea Supply, Golar LNG, Golden Ocean, Marine Harvest, Seadrill and Ship Finance International, and others.
In 2005, sensing an upcoming boom in oil exploration and production, he established Seadrill Limited and forayed into deep-water drilling. He structured Seadrill so it paid rich dividends (which he paid no taxes on as a citizen of Cyprus) and used his earnings to buy a 20% stake in Marine Harvest, the world leader in salmon farming (which is now his third largest holding after Seadrill and Golar LNG).
In 2006, Fredriksen made his biggest deal ever – the $2.7 billion acquisition of deep sea driller Smedvig, a Norwegian company and one of Seadrill’s main competitors. The Smedvig acquisition vaulted Seadrill into the top ranks of offshore oil drillers, and he built on this success to focus on harsh environment deep sea drilling with the formation of North Atlantic Drilling Ltd. (NADL) in February 2011 with harsh environment drilling rigs dropped down from Seadrill. North Atlantic Drilling went public in 2013, with shares listed on the NYSE.
Over the years, Fredriksen has grown his businesses organically and through acquisitions, with subsidiaries involved in oil trading and services. In 2011, his Arcadia Petroleum trading unit was accused of manipulating oil markets in the U.S., a claim Fredriksen rubbished as baseless.
When the oil tanker business weakened in 2012, Frontline faced a $530 million loss so he spun-off its assets to provide liquidity and formed Frontline 2012 as part of the business restructuring.
Today, Fredriksen has major stakes and controlling positions in about 18 companies that have a combined market capitalization of over $52 billion. Collectively, his companies own or control a fleet of 370 vessels and offshore rigs valued at about $300 billion, with headquarters typically in Bermuda and operations across the globe. In addition, Marine Harvest and his other operations are worth several billion.
Fredriksen owns the world’s largest fleet of environmentally safe, double hulled tankers, and is passionate about minimizing the environmental impact of marine operations following an oil spill accident of his Sea Empress vessel off Britain’s west coast in 1996.
Fredriksen is actively involved in all of his businesses and relies heavily on fellow Norwegian Tor Olav Troim, who has been Fredriksen’s de facto right-hand-man for the past 19 years, and recently announced plans to focus on Seadrill, Golar LNG and Marine Harvest – Fredriksen’s top three holdings – while Fredriksen handles the shipping business he grew up on.
Going Strong At 70
Fredriksen, who turned 70 in May 2014, appears to have no plans of slowing down. His daughter Cecilie apparently admonished him that “Life isn’t supposed to be a punishment, Pappa” but Fredriksen plans to focus on growing his empire and handing over most of it to his daughters who are actively involved with portfolio companies, while donating a part of his fortune to medical research. Fredriksen is also passionate about soccer and owns the Valerenga Football Club in Oslo, Norway, close to the working class neighborhood he grew up in.