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Keppel Ltd. (Keppel), through its Infrastructure Division, has seeded a 39% stake in the Keppel Merlimau Cogen Plant (KMC) to the Company’s flagship open-ended infrastructure fund, Keppel Core Infrastructure Fund (KCIF) as its first asset. The SGX-listed Keppel Infrastructure Trust will continue to hold 51% of KMC, with the remaining 10% retained by Keppel. The completion of the transaction will allow KCIF to anchor its portfolio with an established asset and stable cash flows as the Fund expands.
KMC, a 1,300 MW combined-cycle gas turbine power plant on Jurong Island, supplies about 14% of Singapore’s electricity, making it a highly strategic and defensive asset. As the first independent power project to enter the Singapore electricity market, KMC has maintained a strong track record of efficiency and reliability since operations began in 2007.
Through progressive enhancements over the years, KMC stands as one of Singapore’s most efficient power plants. Keppel’s Infrastructure Division completed a significant upgrade of one of KMC’s gas turbines in 2022 to boost its efficiency, reduce emissions, and enable hydrogen compatibility. The high efficiency upgrade of a second gas turbine unit has been planned and is expected to be completed in second half of 2025.
KMC benefits from a long-term capacity tolling agreement (CTA) with Keppel, through its Infrastructure Division, until 2040, receiving monthly capacity payments for making the plant’s full capacity available to Keppel’s electricity retail arm. The capacity payment is paid monthly regardless of the actual power generated by the plant and does not vary with electricity demand or prices. This arrangement not only provides KCIF with a stream of stable cash flow but also ringfences the Fund’s market exposure to Singapore's wholesale power market. Keppel’s Infrastructure Division will continue to operate and maintain the plant.
Ms Janice Bong, Managing Director, Power and Renewables, of Keppel’s Infrastructure Division, said, “KMC is a prime example of Keppel’s asset-light business model. This synergistic collaboration between Keppel, KCIF and KIT is yet another showcase of how Keppel creates value as a global asset manager and operator for our stakeholders, including investors and customers. As the operator of KMC, and sponsor of both KCIF and KIT, Keppel will continue to earn recurring distributions and fees.”
Ms Jee Kim, CEO of KCIF, said, “We are very excited to offer KCIF investors exclusive access to KMC, a highly-strategic core asset in Singapore with attractive, availability-based cash flows backed by favorable long-term agreements and cost pass-through mechanisms. This transaction highlights KCIF’s synergy with our sponsor Keppel and positions us to seize opportunities in Asia Pacific's growing infrastructure market and deliver the best risk-adjusted returns to our LPs.”
KCIF is an open-ended infrastructure fund with a target size of US$2.5 billion, focused on highly-defensive infrastructure assets in developed Asia Pacific markets. These target assets provide stable, long-term cash flows, supported by proven operating track records and long concessions with strong counterparties in well-regulated sectors. KCIF will further leverage Keppel’s deep operational expertise to add value to the assets and deliver sustainable, predictable returns to investors.
The abovementioned transaction is not expected to have any material impact on the earnings per share and net tangible asset per share of Keppel Ltd. for the current financial year.
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About Keppel Ltd.
Keppel Ltd. (SGX:BN4) is a global asset manager and operator with strong expertise in sustainability-related solutions spanning the areas of infrastructure, real estate and connectivity. Headquartered in Singapore, Keppel operates in more than 20 countries worldwide, providing critical infrastructure and services for renewables, clean energy, decarbonisation, sustainable urban renewal and digital connectivity. Keppel creates value for investors and stakeholders through its quality investment platforms and diverse asset portfolios, including private funds and listed real estate and business trusts.
About Keppel Core Infrastructure Fund
Keppel Core Infrastructure Fund (KCIF) is Keppel’s flagship open-ended infrastructure fund with an initial target size of US$2.5 billion. KCIF focuses on highly defensive and essential infrastructure assets across the Asia Pacific developed markets and delivers stable, long term and predictable cash flows to investors.
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