Keppel DC REIT’s Bold Move: S\$1 Billion Equity Fundraising to Drive Strategic Growth

Keppel DC REIT has announced a significant equity fundraising initiative aimed at raising approximately S\$1 billion through a combination of private placement, preferential offering, and sponsor subscription. This ambitious move is poised to strategically enhance the REIT’s asset portfolio, strengthen its financial position, and provide greater flexibility for future growth opportunities.

Key Highlights

• The equity fundraising comprises three components: a private placement targeting at least S\$600 million, a preferential offering aiming for S\$300 million, and a sponsor subscription by Keppel DC Investment Holdings Pte. Ltd. for approximately S\$85 million.
• The private placement will be priced between S\$2.074 and S\$2.128 per unit, and the preferential offering will be priced between S\$2.03 and S\$2.08 per unit, both representing discounts to the current VWAP of S\$2.2017.
• The new units will increase the total number of units in issue by approximately 27.1%, enhancing the liquidity and trading profile of Keppel DC REIT.

Strategic Growth and Financial Strengthening

The proceeds are primarily earmarked for the acquisition of interests in two data centers, Keppel DC Singapore 7 and 8, strategically positioned in Asia’s leading data hub. This acquisition is expected to immediately accrete distribution per unit and provide multiple growth levers, including rental uplifts and capacity expansion.

The equity fundraise will also reduce Keppel DC REIT’s aggregate leverage from 39.7% to approximately 33.3%, providing a stronger financial platform to pursue further acquisitions and growth opportunities.

Shareholder Information and Impact

Shareholders should note the issuance of the new units will not participate in the advanced distribution but will contribute to future distributions post-issuance. The advanced distribution is set for existing units up to the day before the issuance of the new units, ensuring fairness to current holders.

Potential Market Impact

This fundraising initiative is a significant step for Keppel DC REIT, potentially impacting its share value due to the strategic nature of the acquisitions and the financial strengthening of its balance sheet. Investors should watch for changes in trading liquidity and the REIT’s market positioning as a result of this move.

Regulatory and Listing Approvals

Keppel DC REIT has secured initial approval from the Singapore Exchange for the listing of the new units, subject to compliance with various rules and conditions. The REIT will seek further approvals at an extraordinary general meeting for the sponsor subscription.

The indicative timeline sets the listing and trading of the new units from late November 2024, with the sponsor subscription expected in early 2025.

Disclaimer

This article is for informational purposes only and should not be construed as investment advice. The details provided are based on the current announcement by Keppel DC REIT and are subject to change. Investors should conduct their own research or consult a financial advisor before making investment decisions.