Billionaire John Fredriksen is poised to spend as much as $3 billion on new ships with the proceeds from selling stock in oil-rig operator Seadrill Ltd., Arctic Securities ASA said.
Fredriksen plans to sell as many as 24 million Seadrill shares through his stake in Hemen Holding Ltd., raising about 5.6 billion kroner ($1 billion), according to a statement yesterday. That will free up money to “increase firepower for shipping acquisitions” during an industry downturn, Arctic, an Oslo-based investment bank, said in an e-mailed note today.
“John Fredriksen is now regarded as the ‘sage of shipping,’ and his every move is seen as leading the market and indicating where the smart money is going,” Frank Dunne, a partner at Watson, Farley & Williams LLP, said in an e-mailed response to questions. The London-based law firm has the world’s largest shipping-finance practice, according to its website.
The billionaire may make his biggest investments in shipping in more than 12 years, said Arctic, which drew parallels with his purchase of 80 vessels worth $4.6 billion between 1996 and 2001. Fredriksen is probably aiming to enter new areas of the industry, particularly oil-product tankers, according to Arctic.
“This is where Fredriksen will employ his Seadrill money,” analyst Erik Nikolai Stavseth said in the note. “This could effectively turn into $3 billion of investments.”
Norway-born Fredriksen, now a Cypriot citizen, is ranked by Forbes magazine as the world’s 72nd-richest person, with a net worth of $10.7 billion. He has public and private shipping interests spanning container vessels, dry-bulk carriers, oil tankers and offshore drilling rigs and has revealed orders for vessels worth at least $1.1 billion this year.
Other shipowners are likely to emulate the billionaire, said Michel Bourgery, managing director of London-based investment bank MB Finance Ltd. Bourgery worked in senior ship-finance roles at DVB Bank SE and BNP Paribas SA until 2009.
“It’s probably a good indication that the bottom in that sector where he’s going to invest -- if he does -- is very near,” Bourgery said by phone. “This guy has such a connection, understanding and guts that probably what he does will be followed by others, but as he’s done it a little earlier, that makes him all the smarter.”
The billionaire is chairman of Frontline Ltd., which he split in two in December after a plunge in returns to the lowest level in more than 14 years left the oil-tanker company at risk of running out of cash. Frontline 2012, the new company created by the separation, bought 10 new tankers and contracts for five under construction from Frontline, paying $1.21 billion.
Arctic placed $285 million as one of the arrangers in the December transaction.
Fredriksen ordered six medium-range oil-product tankers last month. He briefly owned a fleet of the vessels in 2001, inherited in a takeover of Osprey Maritime, and sold them within months of the transaction. The ships haul refined products such as jet fuel and gasoline.
The proceeds from the share sale will be used for “investment opportunities” including ordering new vessels and buying distressed assets, Seadrill said in yesterday’s statement.
Hire costs for very large crude carriers that haul about a fifth of the world’s oil will average $19,000 daily this year, the lowest level since at least 2004 and 19 percent of the high of $97,467 reached in 2008, according to an Arctic presentation.