Singapore’s ST Engineering has agreed to buy a shipyard from Keppel Corp to accommodate its growing ship repair activities.
The Singapore-listed company is buying the facility at 55 Gul Road from Keppel FELS for SGD 95m ($71.6m), according to a regulatory filing.
ST Engineering said the assets acquired include three floating docks, existing buildings, workshops, and unspecified machinery.
“This asset purchase obviates the need to build a greenfield shipyard, which would require much higher construction and material costs as well as lead time,” the company said.
The new Gul yard replaces ST Engineering’s existing Tuas shipyard, the lease for which will expire at the end of 2024.
“The approximately 141,000 sq metre Gul yard, with a gross built-up floor area of 74,593 sq metres, has a remaining lease until August 2030 which can be extended by another 20 years,” ST Engineering said.
ST Engineering has another shipyard at Benoi that is mainly used for shipbuilding.
ST Engineering said its ship repair business in Singapore has “performed well and has been profitable over the years and continues to grow”.
“To maintain its competitiveness in the ship repair segment, the Gul yard will be progressively upgraded to be a smart shipyard, adopting end-to-end digitalisation that will power the ship repair cycle and processes,” ST Engineering said.
The new Gul yard will also be used to support the company’s other marine segments, such as module fabrication and offshore renewable projects, it added.
“Taking over this brownfield site versus constructing a replacement greenfield site is an effective way to minimise capex,” said Ng Sing Chan, president of ST Engineering’s marine arm.
“More importantly, building on the existing infrastructure and facility enables us to start operating immediately and effectively with minimal disruption to our operations.”
Keppel Corp’s sale of the yard comes as the group looks to exit the marine and offshore space as part of its focus on less volatile sectors.
It is in the final stages of combining its offshore and marine activities with local rival Sembcorp Marine.
Keppel obtained shareholder approval for the merger at an extraordinary general meeting in December 2022.
Last week, Sembcorp Marine received in-principle approval from the Singapore Exchange for the combination. Its shareholders are due to vote on the deal on 16 February 2023.
Meanwhile, ST Engineering’s move to expand capacity in Singapore comes barely months after it announced it was quitting the US shipyard market.
In November 2022, it said it was divesting its interests in its US marine subsidiaries, VT Halter Marine and ST Engineering Halter Marine and Offshore to Bollinger Shipyards for $15m.
The divestment came after the two business units incurred a combined net loss before tax of $256m between 2017 and 2021, with an annual net loss before tax that ranged from about $40m to $60m.
ST Engineering said it regularly undertakes a regular portfolio review and rationalisation to ensure that it focuses on businesses that are strategic and that yield higher returns.
