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Keppel buys 50% stake in Temasek's Pierfront Capital for US$7.8m

KEPPEL Corp's unit KC Management One will buy a 50 per cent stake in Pierfront Capital Fund Management (PCFM), a subsidiary and investment manager of Pierfront Capital Mezzanine Fund (PCMF), for US$7.8 million.

PCMF is an alternative credit investment company in which Temasek Holdings has a 90.91 per cent stake. The other 9.09 per cent is held by Sumitomo Mitsui Banking Corporation.

As Temasek is a controlling shareholder of Keppel, the deal is an interested person transaction under the Singapore Exchange rulebook.

However, shareholder approval is not required for the deal as its aggregate value does not exceed 3 per cent of Keppel's latest audited net tangible assets.

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The deal will see PCFM acting as the investment manager of Keppel-Pierfront Private Credit Funds, a series of funds that will provide credit to corporates or projects in the real asset sectors.

A precedent condition for the deal requires PCFM to have obtained a Capital Markets Services Licence for fund management from the Monetary Authority of Singapore.

The deal consists of a US$6.8 million cash consideration plus a US$1 million amount payable upon its completion. The total amount will be funded by internal working capital, said Keppel in a media release on Wednesday.

The deal amount considered, among other factors, the potential synergies between PCFM's business and Keppel Capital’s fund management business. Keppel Capital is the asset management arm of the Keppel group and owner of KC Management One.

Christina Tan, CEO of Keppel Capital, said: "The strategic acquisition of a stake in Pierfront Capital allows Keppel Capital to manage mezzanine loans for private debt, while extending our fund management capabilities beyond the equity layer of the capital stack.

"The private mezzanine debt for real estate and infrastructure projects is a growing asset class, and we are confident that Keppel-Pierfront Private Credit Funds will be well-positioned to capture investment opportunities and create value for investors and the Keppel Group."

Keppel Corp shares edged down S$0.01 or 0.1 per cent to S$6.86 as at 4.01pm.