Keppel Infrastructure Trust to acquire Keppel Marina East Desalination Plant

Keppel Infrastructure Trust to acquire Keppel Marina East Desalination Plant 

Keppel Infrastructure Trust (KIT) announced the purchase of 50% equity interest in Marina East Water Pte. Ltd. (MEW) from its sponsor.  

MEW owns the Keppel Marina East Desalination Plant (KMEDP) and has an enterprise value of S$323 mn. 

KIT’s 50% equity interest however, will entitle it to 100% of the economic benefit from MEW.

Transaction expected to be accretive to distribution per unit

According to management of KIT, the transaction is expected to secure long term and stable cash flows, and be accretive to distribution per unit (DPU) by 0.4%. 

The acquisition is also expected to deepens KIT’s exposure to water treatment solutions in Singapore and enhance the strength and resilience of KIT’s portfolio. 

KIT intends to fund the acquisition with internal sources of funds and existing debt facilities. 

KIT’s net gearing is expected to increase slightly from 39.8% as at 31 December 2023 to 40.2% on a pro forma basis following the acquisition.

Keppel Infrastructure Trust has been active in asset recycling 

KIT has been actively engaging in asset recycling efforts to optimise KIT’s long-term portfolio value, having recently announced the divestment of its entire 50% stake in Philippine Coastal on 23 October 2024 for an Enterprise Value of US$460 mn (S$598 mn), realising a gain of US$21.1 mn (S$27.5 mn). 

Philippine Coastal was first acquired in 2021. KIT’s assets under management (AUM) will from S$4.5 bn in 2021 to approximately S$9.0 bn upon the completion of the MEW acquisition, which is expected in 1Q25. 

As this is an Interested Person Transaction (IPT), unitholders’ approval for the proposed transaction will be sought at an Extraordinary General Meeting (EGM) to be convened.

Maintain NEUTRAL

We maintain our NEUTRAL rating with an unchanged target price of S$0.48. 

We have maintained our DPU forecasts as we do not expect the acquisition to have a significant impact on KIT’s near term distributable income. 

Based on our estimates, KIT is expected to offer a dividend yield of 8.2% in 2024. 

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Related links:

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

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