Keppel Infrastructure Trust · SGX:A7RU
Keppel Infrastructure Trust — Investor Presentation (October 2022)
52 slides from Keppel Infrastructure Trust's investor presentation, Oct 11, 2022
Slide 1: Investor Presentation October 2022
Investor Presentation October 2022
Slide 2: Important Notice
Important Notice The information contained in this presentation is for information purposes only and does not constitute or form part of, and should not be construed as, any offer or invitation to sell or issue or any solicitation of any offer or invitation to purchase or subscribe for any units (“U
Slide 3: Outline
Outline Overview 4 Key Investment Highlights 7 Appendix 17 Constituent of: Awards and Accreditations: MSCI Singapore FTSE ST Large Small Cap Index & Mid-Cap Index 3
Slide 4: Overview
Overview Borkum Riffgrund 2, Germany
Slide 5: Largest SGX-listed diversified infrastructure business trust
Largest SGX-listed diversified infrastructure business trust Providing exposure to the resilient and growing global infrastructure sector S$6.1b AUM1 12 evergreen businesses 10 mature economies Portfolio of scale providing global and concession assets Focused on investment grade jurisdictions access
Slide 6: Growing the Energy Transition and Environmental Service sectors
Growing the Energy Transition and Environmental Service sectors Expanding presence to AA and AAA-rated countries in Europe and North Asia European Onshore Wind Platform1 BKR2 – German Offshore Wind Farm1 EMKH – Integrated Waste Platform1 Description ▪ 258MW operating onshore wind assets in ▪ 465MW o
Slide 7: Key Investment Highlights
Key Investment Highlights EMKH, South Korea
Slide 8: Investment rationale
Investment rationale ▪ Strong sectoral megatrends underpin portfolio ~30% growth in 1 Transformative acquisitions that align with KIT’s growth strategy ▪ Well-balanced mix of infrastructure businesses and assets in developed markets with best-in-class partners AUM to S$6.1bn1 723 MW ~1.3GW2 2 Growin
Slide 9: Transformative acquisitions that align with KIT's growth strategy
1 Transformative acquisitions that align with KIT’s growth strategy Strong sectoral megatrends underpin portfolio Transformative acquisitions Exposure to the global green infrastructure sector with growth potential ▪ Strategic entry into the European renewable energy sector with investments in windf
Slide 10: Transformative acquisitions that align with KIT's growth strategy
1 Transformative acquisitions that align with KIT’s growth strategy Diversified global portfolio of infrastructure businesses and assets 2H 2022 Jun 2022 Energy Transition and Environmental Services Environmental Services Jun 2022 Environmental Services European Onshore Wind Platform Jun 2022 Energy
Slide 11: Growing KIT's exposure to green infrastructure segments
2 Growing KIT’s exposure to green infrastructure segments Benefiting from secular tailwinds of a circular economy and global decarbonization roadmap Generational megatrends Net-Zero Global Waste Carbon Taxes towards sustainable assets to >140 countries considering net zero With rapid population grow
Slide 12: Strengthens cash flow resilience
3 Strengthens cash flow resilience Strategically located wind farms in the mature renewable energy markets across Europe Fäbodliden Högaliden Exposure to attractive power price outlook in Europe Sweden 79.2 MW 107.5 MW COD 2015 Norway COD 2021 Cash flow visibility with attractive FiT regime and floo
Slide 13: Strengthens cash flow resilience
3 Strengthens cash flow resilience Rare opportunity to acquire a waste management platform of scale in South Korea Strong operational Best-in-class operations Businesses strategically located in key industrial regions track record Korea Environment Development 95% >340 operating days/ annum in the (
Slide 14: Strengthens cash flow resilience
3 Strengthens cash flow resilience Diversify into new sectors and markets in Europe and South Korea Diversification by Asset (%) Diversification by Geography (%) As of 30 June 2022 Pro forma Post Acquisitions1 As of 30 June 2022 Pro forma Post Acquisitions1 Environmental Distribution & Services, 13%
Slide 15: Accretive acquisitions
4 Accretive acquisitions Deliver new long-term income streams, supporting sustainable DIPU growth Pro-forma FFO1 Pro-forma DIPU1 (S$m) (S$ cents per unit) ▲44.6% 287.5 4.22 270.8 ▲9.6% 16.7 0.31 72.0 3.91 198.8 3.85 0.06 FY2021 Acquisitions Pro-forma Aramco Gas Pro-forma FY2021 Acquisitions Pro-form
Slide 16: Reinforces KIT's commitment to ESG targets
5 Reinforces KIT’s commitment to ESG targets Driving long-term value creation through sustainable investments; supporting global climate agenda Renewables as a percentage Critical component of Reduce emissions intensity1 of KIT’s AUM the circular economy Increase exposure of renewable Contributing t
Slide 17: Appendix
Appendix Lista, Norway
Slide 18: Advancing Sustainability, Driving Performance
Advancing Sustainability, Driving Performance Committed to achieving operational excellence that is led by our environmental, social and governance strategy and sustainability initiatives 2 WTE plants with a Capable of processing up combined capacity to treat to 19% of desalinated approx. 40% of Sin
Slide 19: ESG at the Strategy Core
ESG at the Strategy Core KIT Board Sustainability management is imperative to the continued success of KIT and its ability to create value Board ESG Committee Establishment of a dedicated Board Environmental, Mr. Kunnasagaran Ms Susan Chong, Mr Adrian Chan, Social, and Governance (ESG) Committee to
Slide 20: ESG Targets
ESG Targets Drive ESG performance and drive long-term value creation Environmental Stewardship Responsible Business People and Community Asset Quality and Safety: Fulfil contractual obligations and Employee Health and Wellbeing: Maintain zero Climate Change Adaptation: Commit to minimise operational
Slide 21: European Onshore Wind Platform Overview
European Onshore Wind Platform Overview
Slide 22: KIT's maiden renewable energy investment
KIT’s maiden renewable energy investment Sponsored by FORAS and investing alongside leading European asset managers ▪ Jointly investing with KLP and MEAG to acquire a 49% stake in a diversified portfolio of three operating onshore wind energy assets in Norway and Sweden (Initial Portfolio) from FORA
Slide 23: Attractive Risk Profile
Attractive portfolio of windfarm assets across the Nordics and UK 258MW of operating projects + 1.3GW of pipeline potential1 Högaliden Initial portfolio 5-year exclusive right to Fäbodliden FORAS’ eligible pipeline 107.5 MW Projects with combined NO4 COD 2021 No development or 79.2 MW capacity of 25
Slide 24: FORAS – a strong and reputable operating partner
FORAS – a strong and reputable operating partner with a visible and extensive pipeline available to the Fundco investors ▪ Asset developer and owner with a long-term cradle to grave mindset; projects designed with long term ownership in mind to minimize lifetime total costs ▪ Excellent track record
Slide 25: Beachhead platform in a mature renewable energy market
Beachhead platform in a mature renewable energy market Supported by strong sector tailwinds, in line with KIT’s growth strategy Nordics Electricity Demand (TWh) 562 ▪ Nordics and the UK are among the most mature renewables markets globally 13 +19.8% 28 ▪ Positive outlook for wind and other renewable
Slide 26: German Offshore Wind Farm Overview
German Offshore Wind Farm Overview
Slide 27: Deepen exposure in renewables with first offshore wind investment
Deepen exposure in renewables with first offshore wind investment KIT’s second investment in renewables, reinforcing strategy to grow the Energy Transition segment ▪ Jointly investing with Keppel Corporation to acquire a 25%1 stake in Borkum Riffgrund 2 (BKR2), a 465MW operating German offshore wind
Slide 28: Well-located windfarm backed by an attractive FiT regime
Well-located windfarm backed by an attractive FiT1 regime Strong and consistent wind strength and resource availability in the North Sea ▪ High wind resource availability in the North Sea: high capacity2 factor of >40% with low variability of <10% between P90 and P503 ▪ Located next to Wadden Sea wh
Slide 29: Ørsted a strong operating partner with proven track record
Ørsted a strong operating partner with proven track record Partnering with a highly regarded developer and operator in the offshore wind sector ▪ Ørsted is a leading player in offshore wind power industry globally with over 30 years of experience ▪ Asset to benefit from operational efficiencies, giv
Slide 30: FiT regime and guaranteed price floor provide cash flow visibility
FiT regime and guaranteed price floor provide cash flow visibility Stable power price outlook in the long term with projected capture price above price floor ▪ BKR2 operates under the German EEG 2014 market premium mechanism with attractive FiT and guaranteed floor price till 2038 ▪ Legislation proh
Slide 31: Favourable tailwinds supporting positive renewable energy outlook
Favourable tailwinds supporting positive renewable energy outlook Driven by decarbonisation and the German government’s push to increase offshore wind capacity Demand drivers Supply drivers ▪ Electricity demand to grow by 2.3% CAGR from ▪ Strong regulatory support to increase 2022 to 2050, supported
Slide 32: EMKH Overview
, KEPPEL INFRASTRUCTURE TRUST EMKH Overview
Slide 33: Proposed acquisition of a leading waste platform in South Korea
Proposed acquisition of a leading waste platform in South Korea Acquisition marks KIT’s expansion into South Korea ▪ Jointly investing with Keppel entities to acquire Eco Management Korea (EMKH), with KIT holding 52% 52% Investor Holdco majority interest ▪ EMKH is a leading integrated waste manageme
Slide 34: EMKH: South Korea's leading integrated waste platform
EMKH: South Korea’s leading integrated waste platform Defensive business backed by blue chip customers Solid Liquid Landfill 3rd largest Largest 4th largest incineration capacity in South waste oil refining player in South landfill capacity in South Korea, Korea (404 tons/day) Korea (154 tons/day) a
Slide 35: Strategic expansion into a market supported by strong tailwinds
Strategic expansion into a market supported by strong tailwinds Supported by continued waste production and limited growth in incineration and landfill capacity Increased Waste Production Waste Treatment Capacity 2.5% CAGR 4.9% CAGR 630 647 584 598 614 614 630 647 573 584 598 534 545 545 573 497 534
Slide 36: High barriers of entry favouring incumbent players with scale
High barriers of entry favouring incumbent players with scale Sustainable competitive advantage creates favourable macro environment for existing players 1 Increasingly stringent environmental policies/regulations ✓ Strong operational expertise ✓ Strong funding capability 2 Challenges in obtaining b
Slide 37: Leveraging proprietary expertise across the Keppel Group
Leveraging proprietary expertise across the Keppel Group Draw on the Group’s development and operational track record to value add and grow EMKH Keppel Infrastructure Trust ▪ Over a decade of track record in managing Proven and patented WTE technologies WTE and water treatment facilities: owns used
Slide 38: Investment in Aramco Gas Pipelines Company
Investment in Aramco Gas Pipelines Company
Slide 39: Diversified portfolio with maiden investment in the Middle East
Diversified portfolio with maiden investment in the Middle East Completed the investment in Aramco Gas Pipelines Company ▪ Part of a global consortium to acquire a 49% stake in Aramco Gas Pipelines Company, which holds a 20-year lease-and-lease-back agreement over the usage rights of Aramco’s gas pi
Slide 40: Invest in a strong and growing business
Invest in a strong and growing business Supported by favourable gas demand dynamics ▪ Saudi Arabia as a stable and attractive investment destination Natural Gas Demand Projections by Sector KSA is world’s most improved economy in Doing Business1 (billion cubic meters)1 Top 10 Jumped 30 8 140 Global
Slide 41: Robust contractual framework with downside protection
Robust contractual framework with downside protection Enhances resiliency of KIT’s portfolio 1 Lease period of 20 years provides long- term cash flow visibility 5 2 Minimum Well-structured volume governance commitment framework from Aramco No CAPEX & OPEX 4 3 risks as Aramco Quarterly tariff retains
Slide 42: 1H 2022 Highlights
1H 2022 Highlights Aramco Gas Pipelines Company
Slide 43: 1H 2022 Highlights
1H 2022 Highlights Strengthening cash flow resiliency through portfolio growth and optimisation ▪ Making headway into the renewables sector ̶ Proposed investment in a European onshore wind platform and a German offshore wind farm DPU Growth Higher EBITDA ̶ Exploring solar farm and energy storage pro
Slide 44: Energy Transition
Energy Transition Operational Cash Flows (OCF) (S$m) ▪ Aramco Gas Pipelines Company: ̶ First quarterly contribution expected in 3Q 2022 43.1 (15)% ▪ City Energy: 36.8 ̶ Customer base grew 0.9% YoY to 881,000 as at end-Jun 2022: 23.4 23.0 Gradual improvement of gas demand from the Commercial & Indust
Slide 45: Environmental Services
Environmental Services Operational Cash Flows (OCF) (S$m) 35.9 4% 37.5 1H 2021 1H 2022 ▪ Fulfilled contractual obligations and operations remained stable ▪ Senoko WTE Plant ▪ Higher electricity costs at the Keppel Seghers Ulu Pandan NEWater ▪ Keppel Seghers Tuas WTE Plant Plant offset by gains from
Slide 46: Distribution & Storage
Distribution & Storage Operational Cash Flows (OCF) (S$m) ▪ Ixom: ̶ Robust performance with healthy demand from all sectors 42.5 6% 43.6 ̶ Expanded product offering with acquisition of Aromatic Ingredients, a Melbourne-based wholesaler, blender and contract manufacturer of essential oils 38.7 39.8 ̶
Slide 47: Portfolio Breakdown
Portfolio Breakdown as at 30 Jun 2022 By Businesses and Assets (%) By Geography (%) 22 4 8 Environmental Services, 8% 8 30 Distribution & S$4.7 billion Storage, 34% S$4.7 billion 58 8 30 4 15 Energy 13 Transition, 36% Ixom Singapore Philippine Coastal Australia, New Zealand and other countries City
Slide 48: Distributable Income
Distributable Income Higher DPU of 1.91 cents for 1H 2022 1H 2022 1H 2021 +/(-) S$’000 S$’000 % Distribution Per Unit (cents) Energy Transition 36,751 43,090 (14.7) - City Energy 13,768 19,723 (30.2) +2.7% - KMC 22,983 23,367 (1.6) Environmental Services 37,464 35,945 4.2 Distribution & Storage 43,6
Slide 49: Balance Sheet
Balance Sheet Building a strong balance sheet to support growth plans ▪ Comfortable debt headroom for growth: S$0.7b to 45% net gearing level ▪ Undrawn committed credit facilities: $153m Net gearing Balance Sheet (S$’m) 30 Jun 2022 31 Dec 2021 31.1% Cash 549 817 Weighted average interest rate Borrow
Slide 50: Capital Management
Capital Management Well-diversified debt maturity profile ▪ Issued $250m notes in May 2022 as part of the $2b Multicurrency Debt Issuance Programme ▪ Mitigate impact of currency fluctuations: 71% of foreign distributions hedged ▪ Weighted average term to maturity of 3.2 years for debt profile1 ▪ Wit
Slide 51: Portfolio Overview
Portfolio Overview as at 30 Jun 2022 Description Customer and contract terms Primary source of cash flows Fixed margin per unit of gas sold, Over 860,000 commercial and residential Energy Transition City Energy Sole producer and retailer of piped town gas with fuel and electricity costs passed custo
Slide 52: Thank You
Thank You www.kepinfratrust.com Connect with us on:
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