Yinson proposes private placement of new shares to fund RE business

Yinson Holdings Bhd (Yinson) has proposed a private placement of 120 million new shares which represent four per cent of its total share base in order to raise RM283.2 million to fund its renewable energy (RE) and green technology investment.

In a filing with Bursa Malaysia, Yinson said it had fixed the issue price of the placement shares at RM2.36 per share, a 6 per cent discount from its last traded price.

The placement exercise is slated to be completed by 2Q24 and the estimated RM283.2 million proceeds have been earmarked for funding of Yinson’s RE and green technology ventures which include electric marine vessels, ebikes and swappable batteries, autonomous technology for electric vehicles, and charging solutions.

In a company update report, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said that the aforementioned green technology ventures are all likely to have negative cash flows initially, which necessitates additional funding in order to scale them up in the coming years.

“The renewable energy business, particularly with operational solar plants in India, offers more predictable cash flows and presents additional financing options beyond the proceeds from private placements,” it said.

Ir added that the proceeds would reduce Yinson’s net debt and gearing of RM11.5 billion and 1.5-fold at the end of October 2023 to Rm11.3 billion and 1.4-fold, respectively.

Overall, the research arm guided that it remained favourable to Yinson due to its strong floating production and storage offshore (FPSO) vessel order book pipeline with multiple major FPSO jobs under the conversion stage which provides significant earnings growth in the coming years, as well as its strong project execution track record which positions the company to benefit from strong structural demand for FPSO contractors in the coming years.

It added that it also like Yinson due to its position as one of the first local oil and gas companies investing in green technology which would help the company achieve its long-term energy transition agenda.

— AFP photo The placement exercise is slated to be completed by 2Q24 and the estimated RM283.2 million proceeds have been earmarked for funding of Yinson’s RE and green technology ventures which include electric marine vessels, e-bikes and swappable batteries, autonomous technology for electric vehicles, and charging solutions.