Singaporean state-owned investor Temasek has made a takeover offer for the troubled offshore oil platform and ship producer Sembcorp Marine, after increasing its shareholding by 4% to 46.6% and triggering an obligation to make a bid for the shares it does not own. The acquisition could be followed by a merger with the offshore operations of Keppel and a transition towards low-carbon intensity industries, such as offshore wind power.
Via its subsidiary Startree Investments, Temasek is obliged to offer at least the highest share price at which it acquired shares in the past six months, prompting it to put in a cash bid at S$0.08 per share. The offer is conditional on Temasek receiving shareholder acceptances that lead to its shareholding exceeding 50% within four weeks.
The obligation to make an offer came after a rights issue was completed this week. In June 2021, Startree committed to subscribing up to 67% of the S$1.5 billion (US$1.1 billion) rights issue for Sembcorp Marine as it seeks to strengthen its balance sheet and enhance its liquidity position amid the coronavirus pandemic. Temasek is also the largest shareholder in Keppel Corp, which is looking to merge its offshore Startree intends for Sembcorp Marine to remain listed following completion of the offer. Last year, Temasek mopped up 1 billion shares in a US$1.5 billion rights issue for 10.5 billion shares that was under-subscribed.
Although Temasek has made its name as a significant global investor and a leader in venture capital, it was set up by the Ministry of Finance to manage state-owned enterprises. It has weathered a range of crises with its portfolio suffered significant setbacks during the Asian Financial Crisis, 9/11 attacks, and the GFC, but it continues to be one of the world’s role models when it comes to institutional investment.
Temasek stepped in to assist its larger domestic portfolio companies as they struggled with the impact of the pandemic on transportation sectors, as well as supporting them in the longer term energy transition. In addition to investing in Sembcorp Marine as it demerges from Sembcorp Industries, it has supported national flag carrier Singapore Airlines’ capital raising.
The investment in the rig builder carries a risk for Temasek. Not only has the company suffered the fall-out from plunging oil prices, it faces a longer term global energy transition that suggests slow oil demand growth and even contraction.
Temasek is seeking to assist Sembcorp Marine's transition to a zero net carbon world as it seeks to "green" the high carbon industries in its portfolio, rather than simply sell them off. Already, the fabricator of rigs is branching out into offshore wind energy. In August, it delivered substations for the Ørsted Wind Power’s Hornsea Two Offshore Wind Farm in the UK, which were constructed in Sembcorp Marine Admiralty Yard in Singapore.
Sembcorp Marine President and CEO, Wong Weng Sun said, “The Group’s diversification and expansion into clean energy solutions segments, including renewable energy and gas value chain, serves to align its business with the global shift towards environmentally-responsible solutions.
“As Sembcorp Marine accelerates its transformation and positions itself for the global shift towards a low carbon economy, it will continue to harness opportunities across the entire O&M and renewable energy sectors, including clean solutions such as electrification, gas value chain, ocean living, as well as carbon capture and storage solutions.”
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