Keppel Infrastructure Trust - Acquisition of Global Marine Group to drive further portfolio growth

Acquisition of Global Marine Group

On 1 April 2025, Keppel Infrastructure Trust (KIT) announced that it will acquire approximately 46.7% interest in Global Marine Group (“GMG”) from Keppel Infrastructure Fund (“KIF”), a wholly owned subsidiary of Keppel Ltd. 

Back in March 2025, KIF and the Co-Investor acquired a 100% stake in GMG. KIT will acquire the shares at the same valuation as KIF and the aggregate investment is estimated at US$90.6 mn (~S$122.3 mn). 

About Global Marine Group

Global Marine Group (GMG), based in the United Kingdom, is a leading global provider of subsea cable maintenance and installation solutions. 

The company operates a fleet of six specialised vessels, representing roughly 10% of the total global fleet of only 54 such vessels. As of March 2025, GMG’s fleet is operating at full capacity, with a 100% utilisation rate.

GMG plays a key role in the global subsea cable infrastructure. The company is responsible for maintaining approximately 450,000 kilometres of subsea cables, which equates to 31% of the total globally maintained cable length. 

In the installation segment, GMG has deployed a total of 320,000 kilometres of subsea cables, representing 20% of the cumulative installed cable length worldwide.

Key business segments

GMG’s business is structured around three primary revenue-generating segments. 

Cable Maintenance (55% of revenue in 2024)

This segment delivers mission-critical services for subsea cable infrastructure across key regions, including the Atlantic Cable Maintenance Zone, the Southeast Asia and Indian Ocean Maintenance Agreement Zone, and the North American Zone. 

Revenue is largely recurring, supported by fixed annual standby fees and repair charges under long-term contracts that typically span five to seven years. These contracts are designed to be inflation-adjusted and include provisions for the pass-through of operational costs.

Vessel Charter (25% of revenue in 2024)

The second segment, vessel charter, accounted for 25% of revenue in 2024. GMG offers long-term vessel charters staffed with specialised crews. These are governed by take-or-pay agreements that usually last between two and four years, providing consistent and predictable income.

Universal Joint and Ancillary Services, Installation Contracts (20% of revenue in 2024)

The remaining 20% of revenue in 2024 came from a combination of universal joint and ancillary services, as well as installation contracts. 

This includes the supply of essential cable repair components compatible with most types of subsea fibre-optic cables, turnkey regional installation projects, and the provision of specialist training and certification services to support the subsea industry.

Acquisition rationale

Keppel Infrastructure Trust believes that the acquisition is strategic and is underpinned by strong fundamentals. 

Firstly, GMG is recognised as an established platform in specialised critical support services, offering end-to-end subsea cable lifecycle solutions. Its fully integrated capabilities will enhance KIT’s position in the subsea cable sector, supporting the broader strategy of expanding into the digital infrastructure ecosystem.

Secondly, global demand for subsea cable installations remains robust, with installed cable length projected to grow at a compound annual growth rate (CAGR) of 6% between 2024 and 2029. This demand outlook is met with constrained supply, as the global fleet of specialised cable vessels is limited to just 54, with six expected to retire within the next five to seven years. This supply-demand imbalance is expected to maintain a favourable competitive environment for GMG.

In addition, the industry features high barriers to entry due to entrenched customer relationships in designated maintenance zones. GMG has built a strong operational track record, with an average customer relationship tenure exceeding 30 years in its core maintenance zones, further reinforcing its competitive position.

A key attraction of the business is its cash flow profile. Approximately 80% of GMG’s revenue is recurring in nature, offering predictable and stable long-term cash flows that align with KIT’s investment criteria.

Following the acquisition, assets under management (AUM) are expected to increase from S$8.8 billion to S$9.0 billion.

Transaction summary

KIT announced that it has entered into a share subscription agreement with JVCo to subscribe for 1,400 ordinary shares presenting approximately 46.7% of the enlarged capital of the JVCo. 

Pre-transaction, KIF indirectly holds approximately 93.3% of JVCo. As JVCo holds an indirect 100% stake in GMG, the proposed transaction will grant KIT an effective ownership of approximately 46.7% of GMG. Post acquisition, KIF and the Co-Investor will indirectly own stakes of approximately 46.7% and 6.7% in GMG, respectively. 

The total investment amount US$90.6 mn, consists a subscription consideration of US$86.6mn and a ticking fee at US$3.9mn. The ticking fee is to compensate the sellers for their time value and opportunity cost of capital from the initial acquisition date in March 2025 to the completion of this transaction. 

In addition, KIT has made an equity commitment of US$52.2 mn (~S$70.9 mn) for potential build or construct of an additional vessel to build future demand. 

The acquisition follows the acquisition of a 50% equity interest in Marina East Water Pte. Ltd on 23 November 2024 for an enterprise value of S$323 mn. To recap, the acquisition was funded with internal sources of funds and new debt drawdown. 

Financial effects 

On a pro forma basis, net gearing is projected to rise modestly from 40.4% to 41.6%. 

The acquisition will be funded through a combination of internal resources, divestment proceeds, and existing debt facilities. 

As part of this strategy, KIT recently completed the divestment of its stake in Philippine Coastal in October 2024 for an enterprise value of US$460 million (S$598 million).

According to KIT, the acquisition is expected to lead to an immediate 3.5% accretion in distribution per unit (DPU), and raise funds from operations (FFO) by 1.3%. 

Shareholder approval required at EGM

This proposed transaction constitutes an Interested Person Transaction (IPT) as the sponsor of Keppel Infrastructure Trust (KIT) is a wholly-owned subsidiary of Keppel Corporation Limited, which holds a deemed interest of 18.21% in KIT. 

In addition, Keppel Infrastructure Fund (KIF), a private infrastructure fund owned by Keppel, is involved in the transaction. Keppel, through KIF, holds more than a 30% interest in the joint venture company (JVCo) that is party to the transaction. 

This proposed transaction is an IPT which requires Unitholders’ approval at the EGM. Further details will be available in due course. 

Maintain NEUTRAL

Keppel Infrastructure Trust (KIT) continues to focus on asset recycling as part of its strategy to optimise long-term portfolio value. 

The transaction is expected to be accretive to FY2024 distributions per unit (DPU), with an uplift of 3.5%, and is expected to increase funds from operations (FFO) by 1.3%.

We maintain our NEUTRAL rating and target price of S$0.48. At the current share price of S$0.425, KIT offers a potential dividend yield of 9.5% based on its pro-forma FY 2024 distribution per unit (DPU) of 4.04 cents. 

At our target price, KIT will offer a potential dividend yield of 8.4%, based on its pro-forma FY 2024 distribution per unit (DPU) of 4.04 cents.

Related links:

• Keppel Infrastructure Trust share price and share price target
• Keppel Infrastructure Trust dividend history and forecast

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