Keppel DC REIT’s Billion-Dollar Equity Move: A Strategic Leap Towards Growth

Keppel DC REIT has unveiled an ambitious equity fund raising initiative aimed at generating gross proceeds of approximately S\$1 billion. The move, officially announced on November 19, 2024, is set to bolster the company’s portfolio with new data center acquisitions and optimize its financial structure.

Key Highlights

• Equity Fund Raising Details: The campaign involves a three-pronged approach: a private placement, a non-renounceable preferential offering, and a sponsor subscription.
• Pricing Strategy: The issue price for the Private Placement New Units is set between S\$2.074 and S\$2.128, while the Preferential Offering New Units range from S\$2.03 to S\$2.08. The Sponsor Subscription Units will match the Private Placement Issue Price.
• Discount Offers: The pricing represents a discount of 3.3% to 5.8% for private placement and 5.5% to 7.8% for the preferential offering relative to the volume weighted average price of S\$2.2017 per unit.

Strategic Benefits for Shareholders

Shareholders are set to benefit from the strategic addition of artificial-intelligence-ready hyperscale data centers, which are expected to enhance distribution per unit and open multiple growth channels via rental uplifts and capacity expansions. The move is aimed at fortifying Keppel DC REIT’s platform for long-term growth.

Shareholder Participation Details

• Shareholders, termed as ‘Entitled Unitholders’, can participate in the Preferential Offering based on their existing holdings as of the record date, November 27, 2024.
• The allotment will be on a non-renounceable basis, meaning provisional allotments cannot be transferred or traded.
• Keppel DC Investment Holdings Pte. Ltd. and Keppel DC REIT Management Pte. Ltd. have committed to fully subscribing to their respective allotments, showcasing strong internal support.

Financial Implications

The proceeds from this fund raising will primarily finance the acquisition of data centers, with a portion allocated for covering associated fees. If the acquisitions do not proceed, funds may be redirected towards repaying existing debt or other corporate purposes.

Market Impact

This fund raising is anticipated to significantly enhance Keppel DC REIT’s financial flexibility, potentially reducing its aggregate leverage from 39.7% to 33.3%. The increase in issued units is expected to improve trading liquidity and attract broader investor interest.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence before making any investment decisions.