25 January 2016
Keppel plans to consolidate its interests in business trust, REIT and fund management under Keppel Capital and grow its asset management business.
In a major restructuring exercise to grow the contribution from its Investment Division, Keppel Corporation Limited (Keppel Corporation) plans to consolidate its interests in business trust management, real estate investment trust (REIT) management and fund management businesses (collectively, “Asset Management”) under Keppel Capital Holdings Pte. Ltd. (Keppel Capital), a wholly-owned subsidiary of Keppel Corporation.
Asset Management is an important part of Keppel Corporation’s strategy and business. Keppel Corporation currently has four subsidiaries (“Subsidiaries”) in Asset Management, namely Keppel Infrastructure Fund Management Pte. Ltd. (the Trustee-Manager of Keppel Infrastructure Trust), Keppel DC REIT Management Pte. Ltd. (the Manager of Keppel DC REIT), Keppel REIT Management Limited (the Manager of Keppel REIT), and Alpha Investment Partners Limited (a fund manager) (Alpha).
Mr Loh Chin Hua, Chief Executive Officer of Keppel Corporation, said, “Creating and developing high quality real estate and infrastructure assets as well as stabilizing and monetizing them to generate strong cash flow and recurring income are integral parts of Keppel’s business model. Keppel’s asset management businesses currently manage S$26 billion of quality assets and contributed S$60 million of profits in 2015. The consolidation under Keppel Capital is part of our continuing plan to grow our assets under management and expand our capital platform for co-investing.”
The proposed consolidation will benefit the Keppel Group by strengthening the Group’s capital recycling platform and ability to make prudent and timely investments with an expanded capital base and without relying solely on its balance sheet. It will also improve the performance of the Subsidiaries and the funds, REITs and business trusts that they manage through centralising certain non-regulated support functions and creating a larger platform which will enhance recruitment and retention of talent, and sharing of best practices. This will improve the returns to the Keppel Group, and to other investors and unitholders, from their investments in the funds and unitholdings in the REITs and business trust. The proposed consolidation will also improve the Group’s stable, recurring income from management fees. Keppel Corporation intends to consolidate its interests in these Subsidiaries and report them under a new consolidated reporting segment as part of its investments arm.
The proposed consolidation is only in relation to the change in shareholding of Alpha, the Trustee-Manager of Keppel Infrastructure Trust, the Manager of Keppel DC REIT and the Manager of Keppel REIT. It does not change the unitholdings in the REITs and business trust or investments in the funds.
Ms Christina Tan will be appointed the CEO-designate of Keppel Capital. Ms Tan is presently the Managing Director of Alpha. Ms Tan possesses over 20 years of experience in investing and fund management spanning the US, Europe and Asia, and has been with Alpha since its inception in 2003. Under her leadership, Alpha has grown its assets under management to over S$12 billion today.
The proposed consolidation is subject to board approval and (if required) shareholder and/or unitholder approval of the relevant Keppel Group entities, as well as the approval of the Monetary Authority of Singapore and other relevant regulatory approvals. Subject to obtaining the relevant approvals, Keppel Corporation aims to complete the proposed consolidation by the second half of 2016.
After the completion of the proposed consolidation, Keppel Corporation may consider increasing its scope to include regulated activities relating to investments and asset management. This increase in scope would be undertaken after obtaining the necessary licences and approvals from the Monetary Authority of Singapore.