Keppel Corporation

[CY09]

Hi shiyi,

Keppel allocated 500 million sing dollars to buy back shares. It used up the full amount which only amounted to 4% of its share base

[CY09]

Good news for shareholders, should the merger of KOM go through, shareholders will be looking at a gain of $3.4 billion over the current value of the assets in the balance sheet.

https://links.sgx.com/FileOpen/MREL_1.%2...eID=745558

Based on a full year result, KOM is only generating $88 million in net profits, with cash generation ability of $115 million. A sale of any amount above $3 biillion is definitely accretive to Keppel Shareholders (but definitely not to sembcorp marine sharheolders)

[specuvestor]

Singapore property behemoth and asset manager Keppel Corp. will unwind its conglomerate structure in a move to increase its recurring income and cut costs.  
Over the next 12 to 18 months the company will restructure into three divisions — funds management, capital investment and operating platforms, which includes infrastructure, real estate and connectivity — according to a statement Wednesday. 
Keppel said it expects annual savings of as much as S$70 million ($53 million) by 2026 from the reorganization.
“This latest restructuring reflects a fundamental shift in how we organize ourselves to operate in a nimbler manner and harness technology to grow at speed and scale,” Chief Executive Officer Loh Chin Hua said in the statement. 
Keppel also announced an interim target of S$100 billion of assets under management by the end of 2026, with a goal to double that by 2030. It had S$50 billion of assets under management at the end of last year. The group will also work toward monetizing assets, including its land bank, to raise as much as S$12 billion by 2026. 
The reorganization comes after Keppel reported full-year net income of S$927 million — beating analyst estimates — but down 9.4% compared to the previous year. Revenue missed estimates by about S$1.5 billion.

-Bloomberg

[weijian]

Wow~ Having to put up just between 5-10% of equity in the sticky FUM business, looks about great! This is in context with CLIM having to seed ~20% of their own money in new funds. This probably explains Keppel Corp's pretty aggressive goal to increase FUM from 53bil (1H23) to 200billion by 2030 (~40% CAGR growth per year from now to 2030)

Briefing for Keppel Corporation’s Retail Shareholders Hosted by SIAS

Of course, when you want to have recurring income, you have to own the assets. When you own the assets, you have to worry about how you are going to fund it. Can it all be from the balance sheet? So that was when we formed Keppel Capital in 2016. The idea was that we wanted to run an asset-light business. At the end of the first half of this year, we have funds under management (FUM) of about S$53 billion, of which about S$3.6 billion was from our balance sheet. The balance comes from third-party funds like pension funds and sovereign wealth funds. If you think about it, our balance sheet is about S$31 billion, so we have been able to grow the FUM beyond the size of our balance sheet. Of course, the target is not to stop there but to go to S$100 billion for FUM by 2026, and then eventually S$200 billion by 2030.

https://links.sgx.com/FileOpen/TRSCR_Bri...eID=769813

[weijian]

Putting up just 10% of equity to seed the fund. Great business economics!

Keppel achieves S$300 million closing for Sustainable Urban Renewal Programme

– Keppel is pleased to announce the closing of a China-focused programme (the Programme) as part of its Sustainable Urban Renewal (SUR) strategy, having secured a global institutional investor for initial equity commitments of RMB 1.6 billion (about S$300 million) of which Keppel’s sponsor stake is RMB 160 million (about S$30 million).

https://links.sgx.com/FileOpen/MREL_Kepp...hieves%20S$300%20million%20closing%20for%20Sustainable%20Urban%20Renewal%20Programme.ashx?App=Announcement&FileID=775267

[weijian]

A 100% stake would be 1034mil and based on 24bil FUM, Keppel Corp is paying 1034mil/24bil = 4.3% of FUM. So at least, Keppel hasn't bought expensive.

From Q&A, the funds will exist for 9~11years, so they are not perpetual. But if the track record is good, future funds will be bigger than previous (as from ppt slide 6). The devil will probably be in the execution like getting the team/principals integrated to Keppel as the parent. So it is clever of Keppel to go in with a 50% stake first and a mixture of equity/cash.

Keppel accelerates transformation with pivotal proposed acquisition of leading European asset manager Aermont Capital

The consideration of up to S$517 million2 for the initial 50% stake in Aermont, which can be funded through a combination of cash and treasury shares acquired through Keppel’s earlier share buyback programme, implies an attractive valuation of c.13x EV/EBITDA

Expands Keppel’s funds under management (FUM) by S$24 billion1 post-acquisition, with further upside potential from co-creating new fund products; Initial focus will be to maintain and support Aermont’s platform, and collectively harness growth opportunities through joint funds.

Media Release: https://links.sgx.com/FileOpen/MREL_Kepp...eID=779494

PPT: https://links.sgx.com/FileOpen/Presentat...eID=779495

Q&A: https://links.sgx.com/FileOpen/TRSCR_Kep...eID=779567

[weijian]

Private credit isn't new, but just hasn't been done much at scale in the local content I suppose - since a lot of these "mezzanine loans" eventually end up with the creditors having to enforce their rights via the court process.

Keppel Ltd. 1Q 2024 Business Update

Just one more question. Can I have some comments on why this is a good time to invest in private credit?

CT: Given the volatility that you are seeing in the global market, the banks are having a harder time in terms of looking at refinancing, but a lot of platforms, a lot of businesses, a lot of different infrastructure projects are ongoing. A lot of the big capital sponsor names are also looking for some mezzanine loans to help them ensure that their projects are able to be financed. So private credit is actually the best space right now in terms of fundraising and there is a lot of traction from investors, because you get stability in terms of yield from the private credit funds. There are ongoing yields because of the interest rates that you charge, and then on top of that, you can typically charge an equity kicker as well, or some upside to it. So the risk-return profile for private credit is actually pretty good.

[specuvestor]

Personally I am skeptical of private credit. Some might remember the once "hot" Crowd Funding was one type of private credit structure in a less credible format. And some may know WMP (Wealth Management Product) in China that even Evergrande borrowed heavily in the past.

Like private equity the valuation is opaque and which can be restructured behind close doors and might never be repaid ie interest only loans; which is unlike private equity that requires an exit strategy ie Private Equity hope to move from Angel Capital to VC to listco but Private credit is usually for already sizable enterprise who cannot get loans from financial institutions or capital markets for whatever reasons, which should be obvious from the higher yields.

https://finance.yahoo.com/news/three-pri...42399.html

Private credit isn't new, but just hasn't been done much at scale in the local content I suppose - since a lot of these "mezzanine loans" eventually end up with the creditors having to enforce their rights via the court process.

Keppel Ltd. 1Q 2024 Business Update

Just one more question. Can I have some comments on why this is a good time to invest in private credit?

CT: Given the volatility that you are seeing in the global market, the banks are having a harder time in terms of looking at refinancing, but a lot of platforms, a lot of businesses, a lot of different infrastructure projects are ongoing. A lot of the big capital sponsor names are also looking for some mezzanine loans to help them ensure that their projects are able to be financed. So private credit is actually the best space right now in terms of fundraising and there is a lot of traction from investors, because you get stability in terms of yield from the private credit funds. There are ongoing yields because of the interest rates that you charge, and then on top of that, you can typically charge an equity kicker as well, or some upside to it. So the risk-return profile for private credit is actually pretty good.

[CY09]

It will be interesting where Keppel can expend its private credit. It has 02 REITs in the US which are hamstrung from depressed valuation and close to hitting creditors leverage convenants- Pacoak REIT is still ok but PRIME US REIT where Keppel has 30% stake in the REIT manager is trying to complete its refinancing. Could Keppel Ltd come in to help out in the refiniancing?