Malaysian offshore and marine (O&M) companies, including Yinson Holdings, are eyeing various O&M projects.
Founded in Johor Bahru in 1983, Yinson Holdings operates through five distinct business units: Yinson Production, which manages floating, production, storage and offloading (FPSO) vessels; Yinson Renewables, focused on generating renewable power; Yinson GreenTech, which provides green energy solutions; Farroson, an asset manager specialising in sustainable infrastructure investments; and Regulus Offshore, which owns and charters offshore support vessels (OSVs).
Investors in Singapore may recall Yinson as the potential saviour for the now-delisted liftboat operator Ezion Holdings. On Feb 18, 2020, Yinson announced a plan to acquire a 63.4% stake in Ezion for US$150 million. This deal aimed to reduce Ezion’s debt from US$1.62 billion to US$403 million.
In an interview with The Edge Singapore the following month, Yinson Group CEO Lim Chern Yuan shared the rationale behind the transaction and the company’s post-acquisition plans. This includes the potential divestment of Ezion’s fleet of tugs and barges, OSVs and drilling rigs.
However, the deal fell through. As the major secured lenders and the subscriber were not able to reach an agreement on the new terms to replace earlier transaction agreements, Yinson decided to walk away from the deal, leading to a write-off of RM84 million recorded in FY2021 relating to its deposit. Ezion was delisted from the Singapore Exchange S68 ’s Mainboard on June 24, 2022.
Yinson has moved on and continues to grow. In a recent interview with The Edge Malaysia, Lim noted that the FPSO market is now more active than in recent years. He pointed out that while rising energy prices have increased demand for FPSOs, the number of companies capable of delivering them remains limited.
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Previously, having a single bidder for a project was a positive outcome. Today, some projects attract no bidders at all. Lim emphasises that this creates a significant opportunity for Yinson.
The company is encountering doubts about the sustainability of its growing debt. This concern has intensified following the release of its FY2024 results, which showed borrowings rising to RM16.3 billion ($4.8 billion) — a 70% increase from RM9.6 billion in FY2023.
This escalation raises the company’s net gearing ratio to 1.66 times in FY2024, up from 1.23 times in FY2023, excluding RM1.79 billion in perpetual securities classified as equity. As of April 30, Yinson’s total borrowings had risen further to RM16.56 billion.
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The company’s finance costs rose 67% y-o-y to RM963 million in FY2024, ahead of the 64% increase y-o-y in net profit to RM964 million. This is before deducting RM135 million in perpetual securities distribution paid that year.
Earlier this year, Bloomberg reported that Yinson was mulling a US$1 billion ($1.3 billion) US IPO for its FSPO unit, which could materialise as early as 2026. When asked about the potential spinoff, Lim described it as an “unlocking of value”.
He adds: “The plan was always to refinance and be in a very solid cash position. The second step is to look at growing the FPSO business and perhaps unlocking value in that process. I hope we can streamline [our plans and] announce them by the end of the year. Spinning off, it seems like you’re just selling off. It’s not really that. It could be about bringing new capital in through listing or finding project partners to take on project risk. There are a lot of ways to look at it.”
On April 19, the said unit, Yinson Production, debuted in the international capital markets with the placement of a five-year US$500 million senior secured corporate bond in the Nordic market. This was followed by the placement of an 18.2-year US$1.035 billion senior secured project bond on May 28, which was closed and listed on the London Stock Exchange on June 5 to refinance FPSO Anna Nery‘s existing financings maturing in FY2027.
