John Fredriksen: Norway’s controversial Viking king
Norwegian shipping magnate John Fredriksen is no stranger to controversy. But has he bitten off more than he can chew in his showdown with President Obama?
In an industry where "leaders' risk appetites rival only their personalities for size, it would be easy to mistake John Fredriksen for a mere buccaneer", says the Financial Times. The world's most closely watched ship-owner "a bear-shaped man whose lived-in look lends credence to stories of his large capacity for drink" has a reputation for undertaking deals that few rivals would contemplate. Yet by following his more cautious instincts for a change, Norway's "Viking King" seems to have played a blinder.
Shipping is notoriously cyclical, but "there's been no cycle like this one", says Forbes. As the owner of the world's largest oil tanker fleet, Frontline, Fredriksen like everyone else made a killing during the years of economic boom. But the speed of the subsequent ruinous bust shocked everyone. According to Fredriksen's right-hand man, Tor Olav Trim, the shipping industry hasn't been in such bad shape since Europe was gripped by the Black Death. "The market," says Fredriksen, "has collapsed totally." Yet his fortune is up 180% in the past three years. How?
Fredriksen has flourished by embracing "two of the most classic rules of a cyclical business" socking away cash during the good times, and diversifying "mightily".
During the boom, Fredriksen extracted more than $3bn from Frontline and its sister shipping companies, and reinvested in new industries. He now controls the world's largest salmon farmer, Marine Harvest. His "most wildly successful" investment, however, is Seadrill, launched in 2005 to capitalise on a shortage of deepwater oil-and-gas-rig ships. He recently deployed some of the proceeds to bail out the ailing Frontline (see below). Thus, while rivals have collapsed into bankruptcy, Fredriksen sails on.
Born in war-time Oslo, the son of a shipyard welder, Fredriksen got his start as a fishing broker, running cargoes from Iceland to Hamburg, says The Wall Street Journal. In the late 1960s, he moved to Beirut where he shipped crude. He made his big money shipping Iranian oil during the 1980s Iran-Iraq war when he became, in the words of his biographer, the "Ayotallah's lifeline", frequently under fire from Saddam Hussein's forces.
This "controversial business" brought him fame and unwelcome attention from the authorities; in 1986, he fought off accusations of fraud. Since then he's never quite shaken his reputation for sailing close to the regulatory wind.
Best-known in Britain for refusing Roman Abramovitch's $200m offer for his Chelsea mansion, Fredriksen leads a peripatetic life. Following a tax dispute with Norway, he is currently a Cypriot citizen, flitting between Spain, Barbados, Bermuda, Norway and Singapore. Now widowed, he has 28-year-old twin daughters, whose suitability to take over is "much debated". For the moment this "modern-day Onassis" shows no sign of quitting. "I've been doing this for 50 years," he told Forbes. "If I stopped, I would probably drop dead."
Fredriksen's brewing battle with Obama
At a meeting in London earlier this year, John Fredriksen had "the slightly euphoric air of the survivor of a road accident, determined to make the most of his new lease of life", says Robert Wright in the FT. As well he might. Fredriksen had just parted with $505m in private cash to rescue his flagship listed company, Frontline.
The move entails creating a new outfit, Frontline 2012, to hold the fleet's prime assets (the newest ships, which operate at a fraction of the cost of older vessels), plus most of the debt. The hope is the rump of the company may survive if tanker rates bottom out. The probability is that, like most of its ships, it will eventually be scrapped.
Nonetheless, the consensus is that Fredriksen got off lightly. "Shipping companies jinxed their own industry by ordering too many grand ships when conditions looked very favourable," says Marketwatch.com. Now they're sinking amid a massive glut.
Fredriksen, who read the runes, can't resist a little Schadenfreude. "I warned him not to do that deal but he wouldn't listen," he says of his Greek-American rival Peter Georgiopoulos of General Maritime, who bought seven tankers in 2010 and was in Chapter 11 within a year. "I don't like to be part of a bankruptcy", is how he explains taking the personal risk to back Frontline. "We're long-term players in the shipping market. Of course, I was thinking about reputation."
In America, at least, that may be about to take a sizeable dent, says Reuters. Brokers at two Fredriksen companies (Arcadia Petroleum and Parnon Energy) are embroiled in "one of the largest-ever oil manipulation cases" accused of attempting to fix the crude market in 2008. "This is Obama having a go" in revenge for the BP oil spill, says Fredriksen, pledging to fight the case vigorously. It promises to be quite a battle.