KUALA LUMPUR (Jan 14): Yinson Production, an indirect subsidiary of Yinson Holdings Bhd (KL:YINSON), has secured US$1 billion (RM4.51 billion) worth of funding from a consortium of international investors, led by a wholly owned subsidiary of Abu Dhabi Investment Authority (Adia), for expansion.
Adia's Platinum Lily B 2024 RSC Ltd, together with funds managed by British Columbia Investment Management Corp (BCI) and RRJ Group, will subscribe to redeemable convertible preference shares (RCPS) and warrants issued by Yinson Production, giving the unit a post-money valuation of US$3.7 billion, according to Yinson in a bourse filing.
The agreement also includes an option for the investors to invest US$500 million more by taking up an additional 500,000 RCPS within the next 24 months, subject to mutual agreement.
Of the proceeds, which will primarily go towards supporting Yinson Production's growth in the floating, production, storage and offload (FPSO) vessel market, US$200 million will be distributed to its controlling shareholder, which is a wholly owned subsidiary of Yinson.
“This landmark transaction comes at a pivotal juncture for Yinson, allowing Yinson Production to capture the great opportunities in the current robust FPSO market, and for Yinson to return capital to our shareholders and fund our energy transition business, Yinson Renewables and Yinson GreenTech,” said Yinson group chief executive officer Lim Chern Yuan.
The capital injection is primarily to fund the growth of the group’s FPSO business as it eyes further projects. Yinson Production currently has a portfolio comprising 10 vessels.
The investment is deemed a disposal of up to 42.4% in Yinson Production to the investors. Yinson's effective stake in Yinson Production could be diluted from 100% to 65.48% upon full conversion of the RCPS and exercise of the warrants. This will give RRJ a 13.81% stake in the unit. while BCI will have 12.08%, and Adia will get 8.63%.
If the additional RCPS option is taken up by the investors and converted, Yinson’s stake could be further diluted to 57.6%. Yinson stressed that it will still retain a majority stake in the unit.
Of the funds raised, RM3.51 billion will go towards Yinson Production's acquisition and conversion of FPSO vessels for new projects it expects to secure in 2025 and 2026.
“In the event the additional investment materialises (the additional 500,000 RCPS option), the group intends to use the additional proceeds of up to US$500 million (RM2.24 billion) for general corporate purposes of Yinson Production,” said Yinson.
Yinson also plans to set aside RM268.53 million to expand the group’s renewable energy business, followed by RM89.51 million for its green technology business, RM89.51 million for repayment of borrowings, and RM313.29 million for working capital.
The group has also earmarked RM134.27 million for share buy-backs and dividends.
“At this juncture, the allocation between share buy-back activities and/or dividends has yet to be decided. Relevant announcements on the dividend declaration, if any, will be made as and when the board decides,” it added.
The transaction is expected to close in the first quarter of 2025, pending regulatory approvals and approval from Yinson's shareholders.
UBS AG, Singapore Branch is the financial adviser for the deal, while A&O Shearman serves as the legal adviser to Yinson Production for the transaction.
Yinson shares, whose trading was suspended on Tuesday pending the announcement, were last traded at RM2.70, valuing the group at RM8.66 billion. The stock will resume trading on Wednesday.