Keppel DC REIT to Raise S\$1 Billion in Ambitious Equity Fundraising Initiative

Keppel DC REIT Management Pte. Ltd. has announced a significant equity fundraising initiative aimed at raising gross proceeds of approximately S\$1 billion. This strategic move involves a mix of private placements, preferential offerings, and sponsor subscriptions, set to impact the company’s financial dynamics and potentially influence its share value.

Key Highlights of the Fundraising Plan

• The private placement aims to generate at least S\$600 million by offering new units to institutional investors at a price range of S\$2.074 to S\$2.128 per unit.
• A preferential offering will raise around S\$300 million, with new units priced between S\$2.03 and S\$2.08, available to entitled unitholders on a pro-rata basis.
• The sponsor subscription will see Keppel DC Investment Holdings Pte. Ltd. subscribing to new units worth approximately S\$85 million, reflecting continued support and alignment with unitholders.

Price Sensitivity and Shareholder Considerations

The issue prices for the new units reflect discounts to the volume weighted average price (VWAP) of existing units, with private placement units at a 3.3% to 5.8% discount and preferential offering units at a 5.5% to 7.8% discount. This pricing strategy is crucial for shareholders as it might affect current unit values and their investment strategies.

Purpose and Strategic Benefits

The proceeds from this fundraising will primarily fund the acquisition of stakes in two advanced data centers in Singapore, enhancing Keppel DC REIT’s portfolio with artificial-intelligence-ready hyperscale data centers. This acquisition is expected to drive immediate distribution per unit accretion and offer long-term growth opportunities through rental uplifts and capacity expansion.

Impact on Financial Structure

Post-transaction, Keppel DC REIT’s aggregate leverage is expected to decrease from 39.7% to approximately 33.3%, strengthening its balance sheet and providing greater financial flexibility for future strategic acquisitions.

Shareholder Approval and Regulatory Compliance

The equity fundraising and associated transactions are subject to approval from unitholders at an upcoming extraordinary general meeting. Regulatory compliance has been ensured, with approval in-principle obtained from the Singapore Exchange Securities Trading Limited (SGX-ST).

Conclusion

This ambitious fundraising initiative by Keppel DC REIT is poised to enhance its competitive edge in the data center market. Shareholders and potential investors should consider the implications of this move on share values and the company’s long-term growth trajectory.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.

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