Keppel Corporation Limited (Keppel) said Tuesday it plans to unlock value from S$3-5 billion of assets over the next 3 years as part of a strategic review of its offshore and marine business.
Keppel affiliate, Keppel Shipyard Ltd., has been awarded contracts by Dutch floater specialist SBM Offshore for the conversion of Floating Production Storage and Offloading (FPSO) vessels for ExxonMobil’s Liza development offshore Guyana. The Liza Destiny FPSO is already producing oil at the Stabroek Block and the Liza Unity FPSO is currently under construction at the company’s shipyard in Singapore.
At a briefing to the media and analysts, Loh Chin Hua, CEO of Keppel Corporation said, “Keppel is well placed to weather the challenging environment and chart our growth path. As we execute our long term plans and build growth engines for the future, we will also seek to realise the Group’s current potential by unlocking about S$3-5 billion of our monetisable assets over the next three years, which will be redeployed to seize new opportunities and improve returns.”
The company said as part of its asset-light business model, it has identified assets with a total carrying value of approximately S$17.5 billion based on the Group’s balance sheet as at June 30, 2020, that can potentially be monetised over time and channeled towards growth initiatives.
These assets include the Group’s landbank which is held at historical cost, development projects, investment properties, assets being developed and stabilised for monetisation through Keppel-managed or third party platforms, various funds and investments, as well as non- core assets such as Keppel Offshore & Marine’s (Keppel O&M) oil rigs.
Keppel said the assets do not include Keppel’s key business platforms, fixed assets such as Keppel O&M’s yards, or some of the units that the Group holds in real estate or other investment trusts where holding of these units aligns Keppel’s interest as the investment managers, with that of the unitholders.
Concurrently, the Company will commence a strategic review of its offshore & marine business amid the sector’s challenging environment, exploring both organic and inorganic options. Organic options include reviewing the strategy and business model of Keppel O&M, assessing its current capacity and global network of yards and restructuring to seek opportunities as a developer of renewable energy assets; while inorganic options would range from strategic mergers to disposal.