What has been a bad year fort the shipping industry has been better for shipping magnate John Fredriksen. As seaborne shipping collapsed last year, so did shipping rates creating lots of red ink in Fredriksen’s corporate reports. So how did the self made Billionaire, he was the son of a welder, increase his wealth 180% in the last three years, securing himself a spot above Richard Branson and the Queen of England on the Forbes list of wealthiest people?
The first reason is his ability to take decisive action to stem losses which, in the past year, included splitting his Flagship company, Frontline Tankers, in two and restructuring many of his holdings. The second reason is a decision he made in 2005 to personally finance a new deepwater drilling company. A company he named Seadrill. Thanks to increasingly high day rates for the deepwater drilling rigs owned by Seadrill shares in the company have accelerated in price over the past few years and currently account account for nearly half Fredriksen’s fortune.
In the current issue of the magazine Forbes tells us another secret of the man: socking away cash during the good times and diversified mightily, buying assets on the cheap.
So it’s no matter that the shipping business is in the toilet. Over the past decade Fredriksen has taken out more than $3 billion in dividends from Frontline and sister companies like Ship Finance International and Golden Ocean. He’s reinvested that cash in new companies like Marine Harvest, the world’s largest salmon farmer; Golar LNG, which ships liquefied natural gas; and Seadrill, which operates deepwater oil-and-gas drill ships.
Seadrill is Fredriksen’s most wildly successful investment. He founded the company in 2005 and built it by acquiring established drillers and building dozens of new rigs, which now compete with the likes of Transocean to bore the deepest holes in the seas. The best rigs are leased out to oil companies for upwards of $600,000 per day. “There’s already a shortage of deepwater rigs,” says Fredriksen, pointing to increased drilling off Brazil, western Africa and the Gulf of Mexico. Seadrill’s shares now account for nearly half—$5 billion—of Fredriksen’s fortune and delivered nearly $400 million in dividends last year.
Click HERE to read the full article on John Fredriksen over at Forbes.