IN a major restructuring exercise, Keppel Corporation is planning to merge S$26 billion worth of its asset management businesses under wholly-owned subsidiary Keppel Capital to grow the contributions from its investment division.
This will involve Keppel Infrastructure Fund Management (the trustee-manager of Keppel Infrastructure Trust), Keppel DC Reit Management (the manager of Keppel DC Reit), Keppel Reit Management (the manager of Keppel Reit), and fund manager Alpha Investment Partners.
Keppel's asset management businesses currently manage S$26 billion of quality assets and contributed S$60 million of profits last year.
Keppel Corp chief Loh Chin Hua said: "Creating and developing high quality real estate and infrastructure assets as well as stabilizing and monetizing them to generate strong cash flow and recurring income are integral parts of Keppel's business model. The consolidation under Keppel Capital is part of our continuing plan to grow our assets under management and expand our capital platform for co-investing."
The proposed consolidation will strengthen the group's capital recycling platform and ability to make prudent and timely investments with an expanded capital base and without relying solely on its balance sheet, Keppel said. It added that this will also improve the performance of the subsidiaries, the funds, Reits and business trusts that they manage through centralising certain non-regulated support functions and creating a larger platform which will enhance recruitment and retention of talent, and sharing of best practices.
This will improve the returns to the Keppel Group, and to other investors and unitholders, from their investments in the funds and unitholdings in the Reits and business trust.
The proposed consolidation is also expected to improve the group's stable, recurring income from management fees.
The proposed consolidation does not change the unitholdings in the Reits and business trust or investments in the funds, Keppel clarified.
Keppel will report the entities under a new consolidated reporting segment, together with its investments.
"The proposed consolidation will also include the centralisation of certain non-regulated support functions in Keppel Capital, namely legal and compliance support services, human resource and general administrative support services, information technology support services and general accounting support services," Keppel said in an earlier release. After the restructuring has been completed, it may increase the scope of support functions to include regulated activities relating to investments and asset management. However, this would require the necessary licences and approvals from the Monetary Authority of Singapore.
Christina Tan, the present managing director of Alpha, will be appointed the CEO-designate of Keppel Capital. Ms Tan has over 20 years of experience in investing and fund management in the US, Europe and Asia. With Ms Tan at the helm, Alpha has grown its assets under management to over S$12 billion.
Keppel Corp aims to complete the proposed consolidation by the second half of this year, subject to the relevant approvals.