Keppel Infrastructure Trust to acquire another 39% stake in Jurong Island power plant for S$128.1 million

[SINGAPORE] Keppel Infrastructure Trust (KIT) announced on Monday (May 4) that it will acquire an additional 39 per cent stake in the Keppel Merlimau Cogen (KMC) plant on Jurong Island for up to S$128.1 million.

The transaction will increase KIT’s aggregate interest in the 1,300 megawatt (MW) facility to 90 per cent.

The deal will be done through the acquisition of Kindle Energy – a holding special-purpose vehicle – for Keppel Core Infrastructure Fund’s (KCIF) investment in KMC with no other operating activities.

KCIF – a subsidiary of Keppel – acquired this very stake to anchor its inaugural private portfolio from the asset manager in March last year.

The remaining 10 per cent of KMC will continue to be held by Keppel Energy, a wholly owned subsidiary of Keppel.

The proposed transaction is to be funded by a combination of internal sources of funds or external borrowing, or possibly both, said KIT.

The transaction is expected to be completed by Jun 30, with a long-stop date of Sep 30.

KIT noted that it was increasing its ownership in the KMC as the power plant has a “strong operating track record”, with historical contractual availability averaging at about 98 per cent in the last 10 years.

In addition, KMC has gone through significant upgrades over the years, including an upgrade of two of its gas turbines over the last four years.

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This has “significantly improved operational efficiency, reduced emissions”, said KIT in a statement, which noted that the upgrades also prepared KMC for future shifts in energy production, including hydrogen compatibility.

KMC now supplies more than 10 per cent of Singapore’s electricity.

Kevin Neo, chief executive officer of Keppel Infrastructure Fund Management, trustee-manager of KIT, said that the proposed acquisition of KMC will generate stable and predictable cash flows for KIT.

If the deal had been completed at the start of 2025, the trust’s pro forma distribution per unit of KIT for FY2025 would have increased 6 per cent to S$0.0418, from S$0.0394, said KIT.

Funds from operations would have increased 8 per cent to S$352 million, from S$326 million.

The transaction is subject to approval from the Energy Market Authority, as well as approval from unitholders through an extraordinary general meeting.

“By increasing KIT’s stake in KMC, we reinforce our commitment to investing in essential infrastructure that underpins Singapore’s long-term energy security, particularly amid today’s volatile energy landscape,” said Neo.

Units of KIT closed flat at S$0.54 on Monday (May 4) before the announcement.