Keppel DC REIT’s Billion-Dollar Equity Fund Raising: A Game Changer for Shareholders

Keppel DC REIT Management Pte. Ltd. has announced a strategic equity fund raising initiative to generate gross proceeds of approximately S\$1 billion. This move is set to potentially reshape the financial landscape of the REIT and bring about significant changes for its shareholders.

Key Highlights of the Equity Fund Raising

• Fund Raising Structure: The initiative comprises a private placement, a non-renounceable preferential offering, and a sponsor subscription, collectively aimed at raising no less than S\$985 million. The private placement alone is expected to bring in approximately S\$600 million, while the preferential offering targets around S\$300 million, and the sponsor subscription an additional S\$85 million [[2]].
• Pricing Details: The issue price for the Private Placement New Units ranges from S\$2.074 to S\$2.128, and for the Preferential Offering New Units, it ranges from S\$2.03 to S\$2.08. The sponsor will subscribe at the Private Placement Issue Price [[1]].
• Discounts Offered: The Private Placement Issue Price represents a discount of approximately 3.3% to 5.8% from the volume weighted average price (VWAP), while the Preferential Offering New Units are discounted by about 5.5% to 7.8% [[3]].

Potential Impact on Shareholders

• Strategic Benefits: The funds raised will be used to finance the acquisition of interests in two data centres, Keppel DC Singapore 7 and 8, enhancing the REIT’s portfolio with AI-ready hyperscale data centres in Asia’s leading data hub. This is expected to provide immediate distribution per unit accretion and ample growth opportunities [[6]].
• Financial Flexibility and Growth: This fund raising aims to strengthen Keppel DC REIT’s balance sheet, reduce aggregate leverage from 39.7% to approximately 33.3%, and enhance the REIT’s capacity for future acquisitions [[7]].
• Market Liquidity: The issuance of approximately 466.9 million new units will increase the total number of units by 27.1%, potentially enhancing trading liquidity and raising the REIT’s market profile [[7]].

Shareholder Specifics

• Commitment by Major Stakeholders: Keppel DC Investment Holdings Pte. Ltd. and Keppel DC REIT Management Pte. Ltd. have committed to subscribing to their full entitlement of the Preferential Offering New Units, demonstrating strong support [[10]].
• Distribution Policy: An advanced distribution will be declared for existing units prior to the issuance of new units, ensuring fairness in income allocation [[12]].

Regulatory Approvals and Timelines

The Singapore Exchange has granted in-principle approval for this initiative, subject to compliance with listing requirements. The private placement is expected to close on 20 November 2024, with the new units trading from 28 November 2024 [[13]].

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should perform their own due diligence before making any investment decisions. Past performance is not indicative of future results. This communication is not intended for distribution in jurisdictions where such distribution is prohibited.