KUALA LUMPUR (Aug 18): Yinson Holdings Bhd has secured US$300 million (RM1.39 billion) from a private equity firm, RRJ Capital, to partly finance its floating, production, storage and offloading asset for the Agogo Integrated West Hub Development Project in Angola (FPSO Agogo).

The group signed a collaboration agreement with RRJ on Friday (Aug 18) to jointly develop energy infrastructure and technology projects globally, including through the provision of the US$300 million financing.

The agreement was also signed by Farosson, the advisory, investment and asset management arm of the group. The signing ceremony was witnessed by Transport Minister Anthony Loke.

“The funds will be mainly for FPSO Agogo, which will be the greenest FPSO in the world, encompassing all the different technologies including carbon capture,” Yinson group chief executive Lim Chern Yuan told reporters after the signing ceremony.

Lim said that while there is decreasing appetite among banks to finance projects in the oil and gas sector, they  are not shying away from the sector.

“I think it is more difficult than before, and as you can see the size of each FPSO has a minimum investment of US$1 billion.

“But if we have the right transition plan and the climate targets, it is still possible to get financing,” he said.

Asked if the capital injection by RRJ is in the form of equity investment or private loan, RRJ chairman Richard Ong said: “It’s a more complicated structure than that”.

“It forms the equity that is needed to build the FPSO Agogo project. The main thing is it needs equity to fund the project,” he said. RRJ manages about US$20 billion assets under management, focusing its investment in infrastructure, logistics and healthcare.

Ong said the agreement between Yinson and RRJ will be for the next five years.

Yinson bagged FPSO Agogo, which is located in Angola, from Azule Energy last February. The deal is worth an estimated US$5.3 billion.

Azule Energy is a 50:50 joint venture between BP plc and Eni SpA. Eni is the largest independent equity producer of oil and gas in Angola.

Under the contract, Yinson will provide, operate and maintain FPSO Agogo for 15 years from the date of the final acceptance, with an option to extend for a further five years. The floater is expected to begin operations in the fourth quarter of 2025.

FPSO Agogo is Yinson’s first production contract in Angola and its eighth such project in the West African region. Yinson has an orderbook of about US$22.4 billion.

According to CGS-CIMB Research, FPSO Agogo is estimated to cost about US$1.8 billion, of which US$500 million will be funded by Eni via upfront payments. The research house said for the project financing, bank debt is currently being arranged for about US$1 billion while the remaining US$300 million will be Yinson's equity portion.

“Given Yinson’s tight cash balances, the company probably intends to tap on a term loan from private equity firms instead of drawing on its own cash,” CGS-CIMB said in a report dated Aug 14.

CGS-CIMB reiterated its “add” call for Yinson with a target price of RM3.57.

On Friday, Yinson was trading three sen or 1.19% higher at RM2.56 in afternoon trading, valuing the group at RM7.84 billion.