Keppel Infrastructure Trust to acquire 70% stake in power plant for up to S$111.6 million
Keppel Infrastructure Trust plans to buy 70% of hydrogen-compatible Keppel Sakra Cogen for up to S$111.6 million, boosting pro forma FY2025 DPU by 5.1%; the 600MW plant has a 30-year tolling contract.
The proposed buy would have increased KIT’s FY2025 DPU by about 5.1% to S$0.0414 on a pro forma basis
Isabelle Chong
[SINGAPORE] Keppel Infrastructure Trust (KIT) is proposing to acquire a 70 per cent stake in Keppel Sakra Cogen (KSC), a hydrogen-compatible combined-cycle power plant, for up to S$111.6 million.
According to KIT’s trustee-manager on Wednesday (Nov 11), KSC is Singapore’s first hydrogen-compatible combined-cycle power plant. The acquisition from Keppel Asia Infrastructure Fund and a co-investor is expected to be distribution per unit (DPU) accretive.
Based on pro forma FY2025 figures, the acquisition would have increased KIT’s DPU by about 5.1 per cent to S$0.0414 from S$0.0394, before scheduled principal repayments on KSC’s refinanced debt begin.
After these repayments commence, the acquisition would still be DPU-accretive by about 2.8 per cent, raising DPU to S$0.0405.
The purchase consideration for the 70 per cent stake comprises a base price of S$105 million and an additional payment of up to S$6.6 million, assuming the deal is completed by Mar 10, 2027.
The deal implies an enterprise value of more than S$780 million for KSC on a 100 per cent basis, taking into account its projected net debt following refinancing.
KIT intends to fund the acquisition through internal funds, external borrowings or a combination of both. Keppel’s infrastructure division will retain the remaining 30 per cent stake.
The 600-megawatt (MW) plant on Jurong Island commenced commercial operations in May 2026. It currently runs on natural gas but can co-fire up to 30 per cent hydrogen.
KSC operates under a 30-year capacity tolling agreement with Keppel Electric, providing fixed payments based on the plant’s availability and capacity, rather than prevailing electricity market prices.
Together with the Keppel Merlimau Cogen plant already in KIT’s portfolio, the two facilities have a combined generation capacity of 1,900 MW and supply about 20 per cent of Singapore’s electricity needs.
Kevin Neo, CEO of the trustee-manager, said the acquisition would strengthen the trust’s investment in Singapore’s essential energy infrastructure.
The proposed transaction is subject to regulatory approvals and approval from KIT unitholders at an extraordinary general meeting. A circular will be issued in due course.
Units of KIT closed flat at S$0.49 on Tuesday.
Source: The Business Times https://www.businesstimes.com.sg/companies-markets/keppel-infrastructure-trust-acquire-70-stake-power-plant-s111-6-million
