Keppel and KIT to co-invest $226 million in European onshore wind energy portfolio

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SINGAPORE (BUSINESS TIMES) – Keppel Corp and Keppel Infrastructure Trust (KIT) will jointly commit €160 million (S$226 million) to secure a 33.33% 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 Norwegian pension fund Kommunal Landspensjonskasse and global asset manager Meag Munich Ergo AssetManagement GmbH would each own around 33.33% of FundCo and commit to investing 160 million euros.

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

FundCo will also have an additional five-year exclusive right and obligation to co-invest in 49% of Foras’ onshore wind asset pipeline in Sweden and Great Britain when the final investment has been determined, until to a total capital commitment of €480 million.

The proposed co-investment in the existing initial 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 funding sources, equity proceeds, debt capital market issues and external borrowings.

Assuming all pledges are utilized, KIT’s expanded portfolio will grow from $4.5 billion in March this year to $4.7 billion. This transaction should support KIT’s overall increase in distributable income per unit.

The above development is not expected to have a material impact on Keppel Corp’s net property, plant and equipment per share or earnings per share for the current fiscal year.

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

Keppel shares were trading up three cents, or 0.5%, at $6.56 as of 9:22 a.m. Wednesday after the announcement. KIT units remained unchanged at 56.5 cents.

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