Keppel DC REIT’s Ambitious \$1 Billion Fundraising: A Strategic Move for Future Growth

Keppel DC REIT Management Pte. Ltd., the manager of Keppel DC REIT, has announced a substantial equity fund raising initiative aimed at generating gross proceeds of approximately S\$1 billion. This strategic move is designed to finance key acquisitions and strengthen the company’s financial position.

Key Details of the Equity Fund Raising

The fund raising will be conducted through three primary channels:

• Private Placement: New units will be offered to institutional and other investors at a price range of S\$2.074 to S\$2.128 per unit, targeting to raise at least S\$600 million.
• Preferential Offering: Entitled Unitholders will be offered new units on a pro-rata basis, priced between S\$2.03 and S\$2.08 per unit, aiming to raise around S\$300 million.
• Sponsor Subscription: Keppel DC Investment Holdings Pte. Ltd. (KDCIH) will subscribe for units at the private placement price to demonstrate support and alignment with unitholders, contributing approximately S\$85 million.

Shareholder Considerations

Shareholders should note the following key points that may influence share values:

• The Private Placement and Preferential Offering issue prices represent discounts of up to 7.8% from recent trading values, potentially affecting market perceptions of unit value.
• The fund raising aims to support the acquisition of data centres, such as Keppel DC Singapore 7 and 8, and strengthen the balance sheet, which may enhance long-term growth prospects.
• The Equity Fund Raising will increase the number of units by about 27.1%, potentially boosting trading liquidity but also diluting existing holdings.

Strategic Benefits and Future Outlook

The raised funds are primarily intended to finance acquisitions of data centres, which are expected to offer strategic growth opportunities, immediate distribution per unit accretion, and enhanced financial flexibility. Additionally, the initiative is expected to reduce Keppel DC REIT’s Aggregate Leverage from 39.7% to 33.3%, thereby improving financial stability.

The issuance of new units under the Preferential Offering and Sponsor Subscription will further solidify the company’s capital structure, allowing it to capitalize on future growth opportunities in the competitive data centre market.

Timeline and Approvals

The process is set to commence with the listing and trading of the Private Placement New Units on 28 November 2024, followed by the Preferential Offering opening on 2 December 2024 and closing on 10 December 2024. The Sponsor Subscription Units are expected to be listed in early 2025.

Approval has been obtained from the Singapore Exchange Securities Trading Limited (SGX-ST) for the issuance of new units, with compliance to listing requirements and discount limits being a condition.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions. The past performance of Keppel DC REIT is not indicative of future results.