Norwegian start-up has raised NOK 13 billion without marketing a single product
Norway’s controversial serial entrepreneur Jostein Eikeland doesn’t need to show his invention to raise funds. Claims that he can produce a giga-battery that lasts longer and has more capacity than anything the world has seen before is enough to raise NOK 13 billion for his latest venture, Alevo Group. That’s around US dollars1.6 billion. Eikeland claims he will sell to Tesla and Samsung, never mind that he has never shown his innovative battery to the world.
This kind of secrecy and defiance of market convention has attracted a dubious set of investors. Among them are, according to Norway’s daily newspaper Dagens Naeringsliv, a pyramid company, the country’s most notorious drug smuggler Gjermund Cappelen and Russian oligarch Dmitry Rybolovlev.
Registered in Valais, Switzerland, Alevo counted around 20 shareholders at its latest annual meeting in Geneva on June 29, 2016. At the meeting, two new board members were unanimously approved: Kuzma Marchuk and Mikhail Sazonov. Both are close to Dmitry Rybolovlev, having worked with him during the 1990s and 2000s in Russia.
Rybolovelev made his billions (he is worth at least $6.5 billion) with a fertiliser, or potash, mining company called Uralkali. He bought shares in the company while working as a broker in Moscow following the collapse of the Communist Party and the Soviet Union. Uralkali mined in the Perm region in central Russia, far away from the prying eyes of Moscow’s new elite. Rybolovlev could foster his mafia connections, although this backfired when the mafia framed him for the contract murder of one of Uralkali’s business partners. Rybolovlev spent 11 months in prison before the major witness changed his testimony. His mafia connections, were also proven beyond doubt.
To avoid prison again, Rybolovlev eventually followed his family in Switzerland. Uralkali – and by extension Rybolovelev – caused one of the biggest environmental disasters when one of its abandoned mines causes gigantic sinkholes. Hundreds of metres wide and deep, the vast holes forced 17,000 residents of Berezniki to leave the city. New sinkholes continue to appear in the region, but Rybolovlev was never held to account.
Rybolovlev is now in the clear, having sold his shares in the company in 2010, and moving first to Switzerland and eventually to billionaires’ playground Monaco, where he bought the most expensive penthouse overlooking the harbour for $200 million. He placed the proceeds of the shares sale in trusts in Cyprus, Panama and the British Virgin Islands and embarked on an unprecedented spending spree: properties including Donald Trump’s Palm Beach mansion, art including the world’s most expensive painting (Mark Rothko’s “No. 6” for $186 million), the controlling share in the AS Monaco football club, shares in several football players (attracting accusations of conflict of interest) and the Greek island of Skorpios, bought from the Onassis family for his daughter Ekaterina. The $120 million spent on shares in Alevo seem small change by comparison.
It is not clear how much Gjermund Cappelen has invested in the company, but his past may impress Rybolovlev. The Singapore-born drug lord was arrested repeatedly during the 1980s and 90s, and now faces a major trial together with his accomplice, the policeman Eric Jensen. Cappelen has admitted to smuggling 16 tons of hashish into Norway.
Neither Rybolovlev nor Eikeland answered questions by Dagens Naeringsliv newspaper about the product or revenues that Alevo claims to produce. In fact, Eikeland’s lawyers tried to remove the article, claiming their client was ill. With shareholders as dubious as Rybolovlev and Cappelen one can see why Eikeland may not feel so good.