Keppel Infrastructure Trust’s (KIT) trustee-manager has agreed to acquire Keppel Core Infrastructure Fund’s (KCIF) 39% stake in Keppel Merlimau Cogen Plant (KMC) for up to approximately $128.1 million. Post-transaction, KIT will hold 90% of KMC, with the remaining 10% retained by Keppel’s Infrastructure Division.
The acquisition is expected to be accretive to KIT's unitholders on a pro forma basis. If the proposed acquisition had been completed on Jan 1, 2025, and KIT held the interests acquired through to Dec 31, 2025, the distribution per unit (DPU) would have increased to 4.18 cents, representing a 6% uplift over the actual DPU of 3.94 cents for FY2025.
The trustee-manager intends to fund the purchase consideration with a combination of internal sources and/or external borrowings.
The trustee-manager says its strategy of acquiring high-quality, essential infrastructure assets will deliver stable and predictable cash flows to KIT. KMC’s robust long-term contract with Keppel’s Infrastructure Division provides strong and stable cash flow generation with well-mitigated risks, further enhancing its position as a strong and stable contributor to KIT’s portfolio.
Additionally, the increased stake will expand KIT’s exposure to essential infrastructure that plays a vital role in supporting Singapore’s long-term energy security, says KIT.
KMC is one of Singapore’s most efficient power plants and has been progressively upgraded and enhanced over the years. This includes significant upgrades of two of its gas turbines in the past four years, which have significantly improved operational efficiency, reduced emissions, and prepared KMC for future shifts in energy production, including hydrogen compatibility. These upgrades not only enhance KMC’s longevity and relevance but also support the growing focus on sustainability and decarbonisation.
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Kevin Neo, KIT’s trustee-manager, says: “KMC is a critical and well-proven asset that has consistently demonstrated efficiency, reliability and strategic importance in supporting Singapore's power system. By increasing KIT's stake in KMC, we reinforce our commitment to investing in essential infrastructure that underpins Singapore’s long-term energy security, particularly amid today’s volatile energy landscape. This proposed acquisition will generate stable and predictable cash flows to KIT, strengthen KIT’s position as a trusted infrastructure asset manager and enhance its ability to deliver sustainable returns for our unitholders.”
The proposed acquisition of KCIF’s 39% stake in KMC is subject to the fulfilment of certain conditions precedent, including the obtaining of regulatory approvals and approval of KIT’s unitholders at an extraordinary general meeting (EGM) of KIT.
