KIT to lift Keppel Merlimau Cogen stake to 90% in $128.1m deal

The deal will boost KIT exposure to Singapore power asset.

Keppel Infrastructure Trust (KIT) is acquiring an additional 39% stake in Keppel Merlimau Cogen Plant (KMC) from Keppel Core Infrastructure Fund, LP for up to about $128.1m, according to separate announcements by KIT and Keppel Ltd. dated 4 May.

Following the completion, KIT will hold an aggregate 90% interest in KMC, whilst Keppel Ltd.’s Infrastructure Division will retain the remaining 10%.

The consideration comprises a base purchase price of about $120.9m and a ticking fee of up to $7.2m, depending on completion timing. The deal is expected to be funded through a mix of internal resources and/or borrowings.

The transaction is subject to unitholder approval at an extraordinary general meeting and regulatory approvals.

Keppel Merlimau Cogen Plant is a 1,300-megawatt combined-cycle gas turbine facility on Jurong Island, accounting for more than 10% of Singapore’s electricity supply, according to the announcement. It operates under a long-term capacity tolling agreement with Keppel’s Infrastructure Division through 2040.

KIT said the acquisition is expected to be accretive to funds from operations and distribution per unit, with pro forma FFO rising about 8% and DPU increasing about 6%, based on the announcement.

If the transaction had been completed for FY2025, KIT said DPU would have been 4.18 cents, compared with the actual 3.94 cents reported for the year.

Keppel said the divestment allows capital recycling, whilst KIT said the acquisition increases exposure to essential infrastructure assets supporting Singapore’s energy supply.