Keppel, KIT to co-invest $226m in European onshore wind energy portfolio

SINGAPORE (THE BUSINESS TIMES) – Keppel Corp and Keppel Infrastructure Trust (KIT) will jointly commit €160 million (S$226 million) to secure a 33.33 per cent stake in a joint investment vehicle, FundCo, which will co-invest in a European onshore wind energy portfolio, Keppel and KIT’s manager said on Wednesday (July 13).

In the joint statement, they said that Norwegian pension fund Kommunal Landspensjonskasse and global asset manager Meag Munich Ergo AssetManagement GmbH will each also hold about 33.33 per cent of FundCo and commit to invest €160 million.

In turn, FundCo will co-invest in 49 per cent of three operating wind farms in Sweden and Norway, which have a combined generating capacity of 258MW. The remaining 51 per cent stake will be held by Olsen Renewables (Foras), a major developer, operator and owner of renewable energy assets.

FundCo will also have a further five-year exclusive right and obligation to co-invest in 49 per cent of Foras’ pipeline of onshore wind energy assets in Sweden and Britain when the final investment has been determined, up to a total capital commitment of €480 million.

The proposed co-investment in the initial, existing portfolio is expected to be completed by the third quarter of this year. KIT intends to fund its commitment of approximately €131 million with a combination of internal sources of funds, proceeds from equity, debt capital market issuances and external borrowings.

Assuming that all commitment is utilised, KIT’s enlarged portfolio will grow from $4.5 billion in March this year to $4.7 billion. This transaction is expected to support KIT’s overall distributable income per unit accretion.

The above development is not expected to have any material impact on the net tangible assets per share or earnings per share of Keppel Corp for the current financial year.

The transaction will mark KIT’s first investment into the renewable energy sector and Keppel Corp’s expansion in the business.

Shares of Keppel were trading up three cents, or 0.5 per cent, at $6.56 at 9.22am on Wednesday, after the announcement. Units of KIT were unchanged at 56.5 cents.