Temasek subsidiary offers to buy majority stake in Keppel for $3bn

Temasek subsidiary Kyanite Investment Holdings has offered $3bn (SGD$4bn) at SGD$7.35 ($5.40) a share for a 30.55% equity stake in oil rig builder Keppel Corporation.

If successful, Temasek and Kyanite would become joint majority shareholders with a 51% stake as Temasek already owns a 20.45% share in Keppel. Kyanite said that Keppel would remain on the Singapore Stock Exchange following the deal.

Temasek president Tan Chong Lee said: “The partial offer reflects our view that there is inherent long term value in Keppel’s businesses, notwithstanding the challenges presented by the current business and economic outlook.

“The partial offer can only be made after the pre-conditions have been fulfilled or waived and this may take several months. For the partial offer to be successful, it will require both majority approval by shareholding of the votes cast and acceptances of not less than 30.55% of the total issued shares.”

Trading has yet to begin on the Singapore stock exchange so Keppel’s stock price stands at SGD$5.84 ($4.29) a share, giving the company a market capitalisation value of SGD$10.62bn ($7.8bn).

Keppel share price in 2019

Temasek

Temasek is an investment company which has a portfolio of SGD$313bn ($231bn) in projects across Asia. An estimated 3% of this portfolio is in energy and includes ownership of Singapore company Pavilion Energy and a 1% stake in Spanish energy company Repsol.

Despite its potential investment in Keppel, Temasek has recently shied away from fossil fuel investments, refusing to invest in Saudi Aramco’s delayed IPO.

Keppel Corporation

Keppel is a construction company that specialises in offshore oil rig design and construction, as well as repairing and converting ships.

For example, in April 2019 it was contracted by Golar for $947m to begin conversion works on its floating liquefied natural gas vessel for the Greater Tortue Ahmeyim contract in West Africa.