Keppel Corporation, through its real estate division, has agreed to divest its 35% stake in Chengdu Taixin Real Estate Development Co., Ltd. to Vanke (Chengdu) Enterprise Co., Ltd.

 

Chengdu Taixin, which is a joint venture (JV) between Keppel and Vanke, owns V City, a 16.7-hectare residential project in Chengdu, China.

 

Vanke will pay a cash consideration of around RMB504 million ($94 million) for Keppel&rsquo s stake. The consideration will be made in a single tranche and no later than Oct 31.

 

The consideration factored in Chengdu Taixin&rsquo s net asset value (NAV) that was confirmed in July by a third-party audit firm. It also took into account the shares&rsquo book value and adjusted NAV of about $99 million as at June 30.

 

The completion of V City in 2020 and the selling out of all 5,399 residential units and 356 street-front shops of the development were also taken into consideration. V City&rsquo s remaining inventory comprises parking lots and a market.

 

Over the years, Keppel has recognised cumulative profits after tax of approximately $57 million from the sales of residential units, street-front shops and other amenities at V City, prior to the divestment.

 

The divestment is expected to be completed within 4Q2023 and is in line with Keppel&rsquo s asset monetisation plans to unlock value that can be invested to pursue new opportunities.

 

So far, Keppel&rsquo s real estate division has monetised over $3 billion of assets in China since 2017, and recognised profits of more than $1 billion.

 

Keppel Corporation has entered into a sales and purchase agreement (SPA) to acquire the remaining 50% stake it does not own in Pierfront Capital Fund Management Pte. Ltd. on Oct 2. The stake was acquired from Clifford Capital Holdings.

 

Pierfront Capital offers bespoke private credit financing solutions in real asset sectors. It focuses on corporate lending to operating companies with defensive infrastructure-like business models, across real asset sectors in Asia Pacific, such as energy, transportation, telecommunications, along with social infrastructure and logistics.   

 

The platform was established in 2015 by Clifford Capital. After the successful deployment of its first private credit fund, Clifford Capital Holdings and Keppel established a partnership in 2020. Both parties also saw their joint sponsorship of the second private credit fund, Keppel-Pierfront Private Credit Fund, LP (KPPCF) in 2020.

 

KPPCF achieved its final close in 2022, and the top-tier investors KPPCF attracted include leading global institutional investors such as the Alberta Investment Management Corporation on behalf of certain of its clients, the Asian Infrastructure Investment Bank, GCM Grosvenor on behalf of a separately managed account, as well as Manulife.

 

&ldquo We believe that the private credit asset class holds promising long-term growth potential especially in today&rsquo s volatile economic landscape and tighter credit markets. We are enthusiastic about opportunities in the Asia-Pacific region, where we see a growing number of companies seeking specialised intermediate capital solutions,&rdquo says Christina Tan, CEO of fund management and chief investment officer of Keppel.

 

&ldquo We believe that the growing need for alternative lending solutions, combined with Keppel&rsquo s deep networks and extensive operating experience within the real asset industry, will strategically position Pierfront&rsquo s existing and upcoming credit funds to seize opportunities in Asian private debt markets. This strategy will enable us to offer investors attractive risk-adjusted returns with downside protection,&rdquo she adds.

 

&ldquo I would like to thank Keppel, Clifford Capital and the Pierfront Capital team for all their support and effort in developing the Pierfront Capital platform. Clifford Capital remains a co-sponsor of KPPCF with Keppel. As Clifford Capital turns its attention to other strategic initiatives, we look forward to continuing our broad and multi-faceted relationship with Keppel and I wish Pierfront Capital and Keppel the very best for the future,&rdquo says Rajeev Kannan, outgoing chairman of Pierfront Capital and non-executive director of Clifford Capital.

 

Keppel Corp is seeking shareholders' go-ahead to change its name to " Keppel Ltd" to better reflect its new brand identity as one company, rather than a conglomerate of diverse parts.

 

Under CEO Loh Chin Hua' s on-going Vision 2030 plan introduced earlier, Keppel is reorganising itself into three " horizontally integrated" platforms for fund management, investment and operations.

 

For decades, Keppel has been run as a conglomerate, with various business units having their distinct identify or listing status.

 

" This latest restructuring reflects a fundamental shift in how Keppel organises itself to operate itself in a nimbler manner and harness technology to grow at speed and scale," reads Keppel in its Sept 26 circular sent to shareholders.

 

At the upcoming EGM, to be held on Oct 18, shareholders will also be asked to give the go-ahead for the company to distribute units of Keppel REIT in specie as part of a bigger dividend package they stand to receive.

 

Keppel Corp' s reported record earnings of $3.6 billion for its 1HFY2023 ended June, due mainly to the one-off gain from the divestment of its offshore and marine unit to Sembcorp Marine S51 0.00% , forming the new entity Seatrium.

 

Keppel had already paid an interim dividend of 15 cents per share following the 1HFY2023 earnings.

 

Under terms of the proposed distribution, for every five Keppel shares held, investors can get to receive a unit of Keppel REIT, which changed hands at 87 cents per unit as of lunch break on Sept 26.

 

The distribution will go ex on Oct 25 and shareholders will receive their Keppel REIT units on Nov 7.

Following the distribution, Keppel' s stake in Kepel REIT will be cut from 46.3% to 37%.

 

According to Keppel in the circular, the proposed distribution will enable shareholders to directly participate in the ownership of, and enjoy returns from, securities held in both Keppel and Keppel REIT without any additional cash outlay.

 

" In addition to the reasons set out above, the proposed distribution serves as a one-off special dividend to commemorate the 55th anniversary of the establishment of the company on August 3 and to thank shareholders for their trust and support over the years," Keppel says.