Offshore specialist Yinson Production eyes IPO, among other exit options for investors

[SINGAPORE] Armed with a US$1 billion confidence boost from investors, Singapore-based offshore specialist Yinson Production plans to give its backers an exit in the next three to five years – through an initial public offering (IPO) or other means.

In January, the company raised US$1 billion from investors including the Abu Dhabi Investment Authority, and funds managed by British Columbia Investment Management and Singapore private equity player RRJ Capital.

While Yinson Production had previously been fully funded by banks, the company has now diversified its funding sources, its chief financial officer Markus Wenker told reporters on the sidelines of an investor event in November.

On why the company opted for private equity, he said: “In the current environment, we could command a higher valuation (in the private market) than we could otherwise have commanded in the equity capital markets, at least, looking at our peers.”

At the same time, Yinson Production is “not naive” and knows that investors will seek returns. “So we are mindful that in probably three to five years… we will look to structure an exit for our investors,” he added.

Yinson Production is a unit of Malaysia-listed Yinson Holdings, and owns and operates floating production, storage and offloading vessels (FPSOs). It became a full-fledged FPSO provider with the acquisition of Norway’s Fred Olsen Production in 2013.

Whether Yinson Production eventually goes public will depend on the market sentiment and the valuation it can command, said Wenker. He highlighted that the company will also have other options, such as a fresh equity raise or upsizing its issuance of corporate debt.

Asked if Yinson Production will tap its parent company’s listed status to raise fresh funds, Wenker emphasised that the Yinson group is organised in a decentralised manner.

Even for project financing, the company guarantee during the construction phase comes from Yinson Production itself, and not Yinson Holdings, he said, adding: “We are standing on our own feet.”

Growing in a “value-accretive” way

Yinson Production has nine FPSOs – across Brazil, Africa and South-east Asia – and another two floating assets under construction.

The company recorded US$608 million in enterprise revenue for FY2025 ended Jan 31, and an adjusted enterprise Ebitda (earnings before interest, taxes, amortisation and depreciation) of US$402 million.

“For the next few years, our priority will be to deploy that equity in a value-accretive way. This is why we have so much emphasis right now on business development,” said Wenker.

Yinson Production sees potential in as many as 20 projects, with some emerging for bids in the next 12 to 18 months, said its chief executive Flemming Gronnegaard.

“It’s no secret; we have a few bids on the street… We are looking at projects across all regions – and that means South America, West Africa and South-east Asia,” he said, adding that the projects range from those involving big oil majors and national oil companies to smaller players as well.

The new Guyana?

Yinson Production is also pursuing growth in Namibia. There is some sentiment in the industry that Namibia could be the next Guyana in the oil market, with fresh oil discoveries.

Said Gronnegaard: “Whether it’s the new Guyana or not, time will tell. But it’s for sure, some significant reserves have been found by some of… our potential clients, and we are in talks.”

He expects first oil there by 2030, noting: “That is a realistic timeline. It allows for a contract to be placed for oil, for FPSOs and the entire infrastructure that is needed no later than 2027.”

Carbon capture and storage (CCS) is another big growth focus for Yinson Production.

In February, Yinson Production fully acquired Stella Maris, a Norway-based CCS company developing a full value chain of solutions. This includes CCS, intermediate storage, offshore transportation and permanent sequestration of the carbon captured from industrial sources.

In September, Yinson Production also partnered Norway-based Carbon Circle to develop CCS as a service for industrial emitters in Europe.

CCS is a “natural evolution” for the business, said Wenker, also noting that Yinson Production has backed a company that does direct air capture – or the extraction of carbon dioxide from the atmosphere.

“We have a strong belief that this will be a strong market... We are in the early days, but it will come,” said Gronnegaard, adding that carbon tax legislation in the EU is driving momentum for CCS.

“There’s no big leap of technical development required. We can take equipment from the supply chain and develop a solution. Commercially, this will prove itself once it’s operational, and we have a strong belief that this will be a strong new business line for Yinson,” he added.

Challenges and opportunities

Yinson Production’s growth plans come amid an oil and gas down cycle, with companies downsizing and divesting assets.

Nevertheless, oil prices are still at levels that exceed projects’ lifting costs – which are the costs to operate and maintain wells per barrel of oil equivalent – said Gronnegaard. “It’s still a healthy environment, and most of our clients have a long-term (view).”

That said, there are some supply chain challenges. For instance, the gas turbines that are needed to power FPSOs are in short supply. To mitigate this, Yinson Production is in talks with supply chain partners to secure turbines.

In a Dec 1 report on the parent company Yinson Holdings, Nomura analysts said that they expect Yinson Production’s profitability to “pick up meaningfully” from the second half of FY2026. They believe that contributions from one of the FPSOs, Agogo, will boost FY2027 earnings.

“By FY2028, we believe operating cash flow will improve significantly to RM2.87 billion (S$900 million), whereby Yinson Production will be the biggest contributor,” added the analysts.

Yinson Production is focused on getting the work done.

Said Wenker of his CEO: “Flemming is flying around the world like crazy to meet with clients, alongside our colleagues in business development. So for the next few years, our focus is very clear.”