Keppel Infrastructure Trust · SGX:A7RU
Keppel Infrastructure Trust — Merger or Acquisition (March 2015)
34 slides from Keppel Infrastructure Trust's merger presentation, March 2015
Slide 1: Investor Presentation
Investor Presentation Creating the largest Singapore infrastructure-focused business trust March 2015
Slide 2: Disclaimer
Disclaimer 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 in Keppel
Slide 3: Table of contents
Table of contents 1. Overview of the Proposed Transactions 2. Key investment highlights of Enlarged Trust 3. Pro forma financials 4. Conclusion 2
Slide 4: 1. Overview of the Proposed Transactions
1. Overview of the Proposed Transactions
Slide 5: Overview of the Proposed Transactions
Overview of the Proposed Transactions CIT + KIT KMC Acquisition Acquisition of Formation of the 51% interest in Enlarged Trust KMC by KIT funded by an EFR A top-tier gas-fired power plant in Singapore Total assets (2) Market value (3) (S$m) Enlarged Trust to be named Keppel (S$m) 4,076 Infrastructur
Slide 6: Formation of the Enlarged Trust
Formation of the Enlarged Trust KIT will dispose of all its business undertakings and assets to CIT in exchange for new CIT units (“Disposal”) KIT will then carry out a distribution-in-specie of the new CIT units to its unitholders CIT to be renamed Keppel Infrastructure Trust (“Enlarged Trust
Slide 7: The KMC Acquisition and EFR
The KMC Acquisition and EFR Acquisition of a 51% stake in KMC from Keppel Energy Pte Ltd (“KE”) Overview KMC owns Keppel Merlimau Cogen Plant, a 1,300 MW combined cycle gas turbine generation facility located on Jurong Island, Singapore Cash consideration of S$510m Consideration Equity value
Slide 8: The KMC plant
The KMC plant Description of the KMC asset A substantial and strategic operational asset Metric Data A top-tier gas-fired power plant in Singapore Total generating 1,300 MW CCGT capacity Strategic asset in Singapore as power plants cannot be easily replicated given land constraints Location Temb
Slide 9: Enlarged Trust Structure
Enlarged Trust Structure Keppel Temasek KIT Public CIT Public 22.9%(1),(2) 19.97%(1),(2) 23.7%(1),(2) 33.4%(1),(2) 100% Trust Deed Enlarged KIFM Trust (3) 100% 51% 51% 100% City Gas City OG(5) KMC(4) Senoko WTE 100% 100% Basslink Pending completion Basslink 100% Telecoms Tuas WTE 70% 100% SingSpring
Slide 10: Diversified portfolio of core infrastructure assets
Diversified portfolio of core infrastructure assets Water and Wastewater Power Generation, Electricity Waste Management Infrastructure Transmission and Gas KIT Senoko Plant Tuas DBOO Plant Ulu Pandan Plant KMC Only waste incineration Newest of the four waste One of Singapore's A top-tier gas
Slide 11: 2. Key investment highlights of Enlarged Trust
2. Key investment highlights of Enlarged Trust
Slide 12: Key investment highlights
Key investment highlights 1 Acquisition of core infrastructure assets with long term stable cash flows 2 Extend average life of distributions 3 Benefits from Keppel’s continued sponsorship 4 Enlarged Trust to adopt a three-pronged growth strategy 5 DPU accretive and attractive yield despite low risk
Slide 13: Acquisition of core infrastructure assets with long-term stable cash flows
1 Acquisition of core infrastructure assets with long-term stable cash flows KIT Investment Criteria CIT portfolio of highly strategic assets DataCentre KIT aims to provide unitholders with City Gas SingSpring Basslink KMC One long-term, regular and predictable distributions by pursuing investment
Slide 14: …which results in a well diversified portfolio
1 …which results in a well diversified portfolio Total assets by segment (Enlarged Trust) as at 31 Dec Total assets by segment (KIT) as at 31 Dec 2014(1) 2014(1)(2) Electricity Water and Transmission Water and Wastewater Wastewater 25% Treatment Treatment 7% 12% Gas 12% Waste Management 13% Waste Ma
Slide 15: Extend average life of distributions
2 Extend average life of distributions Value beyond initial contract life 50 yrs KMC and Basslink have KMC 15 + 10 yrs 25 yrs substantially longer design 15 yrs lives than existing contracts 4 yrs Average age Remaining Extension Design life Land lease contract life option Could be extended with
Slide 16: Benefits from Keppel’s continued sponsorship
3 Benefits from Keppel’s continued sponsorship A wholly-owned subsidiary of Keppel Corporation Limited Drives the Keppel group’s strategy to invest in, own and operate competitive energy and environmental infrastructure solutions and services Complementary businesses to that of the Enlarged Tr
Slide 17: Enlarged Trust to adopt a three-pronged growth strategy
4 Enlarged Trust to adopt a three-pronged growth strategy 1 Growth of existing portfolio 2 Keppel sponsorship 3 External opportunities Third Party Acquisitions Meet investment criteria Initial focus on existing energy, telecoms, waste and water sectors Jurisdictions with well Keppel Infrastruc
Slide 18: DPU accretive and attractive yield despite low risk profile
5 DPU accretive and attractive yield despite low risk profile Forward dividend yield (FY2015E) DPU(1) accretive transactions (S$ cents) 9.5% 8.08 (4) 7.98 (4) 8.6% 7.82 7.86 (3) 7.86 (3) 7.7% Average: 7.1% 6.91 (2) 7.2% 7.2% 6.3% 6.2% 6.0% 5.3% Asian Pay Hutchison Religare Enlarged KIT(5) Keppel DC
Slide 19: Enlarged Trust will become the flagship investment vehicle for Singapore infrastructure
6 Enlarged Trust will become the flagship investment vehicle for Singapore infrastructure Market value (1) Total assets (4) Public float (current vs pro forma) (6)(1) (S$m) (S$m) (S$m) (2) 1,990 +195% 1,940 (3) 4,076 +567% 1,335 +78% +278% 1,199 (2) 1,149 (3) 2,311 782 1,765 1,700 (5) 674 525 (2) 34
Slide 20: Enlarged Trust will become the flagship investment vehicle (cont’d)
6 Enlarged Trust will become the flagship investment vehicle for Singapore infrastructure (cont’d) Market capitalization (in S$m) $8,363 (1) $1,990 (2) $1,250 $857 $846 $782 $674 Hutchison Port Enlarged Trust Asian Pay Ascendas Religare CIT KIT Holdings Trust Television Trust India Trust Health Trus
Slide 21: Unique investment proposition offering portfolio diversification
6 Unique investment proposition offering portfolio diversification Forward dividend yield (2015E) Infrastructure trusts Singapore Industrial REITs 10.2% 9.5% 8.6% Average: 8.2% 7.7% 7.9% 7.6% 7.5% Average: 7.0% 7.2% 7.2% 6.1% 6.8% 6.4% 6.3% 6.2% Accordia Asian Pay Hutchison Religare Enlarged KIT (1)
Slide 22: 3. Pro forma financials
3. Pro forma financials
Slide 23: Financial snapshot
Financial snapshot KIT(1) CIT(1) KMC(1) KIT + KMC Enlarged Trust (in S$m) Cash flows Adjusted EBITDA 52.2 128.7(2) 106.0(3) 158.2 292.2(2)(4) Distributable cash flows(5) 55.9 65.7(6) 42.4(3) 98.3 169.3(4) Total distributions 49.2 49.8 40.9 89.4 146.3(7) DPU (cents) 7.82 6.91(8) n.m. 7.86 – 8.08(9) 7
Slide 24: Multiple sources of cash flows
Multiple sources of cash flows Adjusted EBITDA(1) by segment (Enlarged Trust)(2)(3) Power Generation 18% Electricity Transmission 19% Water and Wastewater Treatment 8% Waste Management 18% Gas 17% Non-controlling Interest 20% Regular and predictable cash flows from a diversified core portfolio of Si
Slide 25: Sustainable capital structure
Sustainable capital structure 39% net debt to total assets Conservative Net debt to EBITDA of 5.5x in light of long term stable cash flow Leverage Excluding Basslink, net debt to EBITDA drops to 3.8x and net debt to total assets drops to 28% Recent financing demonstrates lenders’ confidence
Slide 26: Sustainable capital structure (cont’d)
Sustainable capital structure (cont’d) Maturity profile Debt overview (in S$m) Blended average interest rate between 4-5% Approximately 92% of the − Singapore average interest rates between 3-4% Enlarged Trust’s loans are due in 955.0 2019 and beyond − Australian average interest rates between 6
Slide 27: 4. Conclusion
4. Conclusion
Slide 28: Why KIT?
Why KIT? Attractive risk adjusted returns Underpinned by multiple core infrastructure assets Generates long term high quality stable cash flows from credit worthy clients or a large customer base Uncorrelated to GDP Potential upsides from existing portfolio and future acquisitions Future growth supp
Slide 29: Appendices
Appendices
Slide 30: KIT Structure
KIT Structure Keppel Corporation Limited 100% 100% Keppel Infrastructure Holdings Pte Ltd (Sponsor) 100% Keppel Integrated Keppel Energy Pte. Ltd. Others Engineering Limited 100% 49.2% 50.8% Trust Deed Trustee-Manager 100% of the units 100% of the units 100% of the units and 100% of the and 100% of
Slide 31: Overview of the Proposed Transactions: KMC Acquisition Structure
Overview of the Proposed Transactions KMC Acquisition Structure KCL(1) 100% 5 Repayment of KI(2) Existing Unitholders New investors Shareholder Loan 1 EFR Preferential Offer 1 1 Placement 2 Acquisition of 51% of KMC 3 Subscription of S$500m 100% <30% S$525m(4) 1 QPDS 2 4 Obtain S$700m Bank S$255
Slide 32: Transaction structure of the Disposal
Overview of the Proposed Transactions Transaction structure of the Disposal 4 Distribution of KIT Unitholders CIT Unitholders S$30m after completion but before the EFR 3 Distribution-in- 1 Distribution of specie of New CIT S$30m before Units completion CIT / Enlarged KIT Trust (1) 2 New CIT Units 1
Slide 33: EGM approvals sought
EGM approvals sought Resolution Description / Purpose 1 Ordinary resolution The proposed acquisition The Trustee-Manager intends to issue New KIT Units at an issue price to be determined so as to of a 51% equity interest in raise gross proceeds of up to approximately S$525 million to fund the KM
Slide 34: Pipeline from Sponsor
Pipeline from Sponsor Keppel Infrastructure’s pipeline [] Keppel Merlimau Cogen - 49% through Keppel Energy Operational since 2007 KI, as the sponsor of Enlarged Trust, owns 49% shareholding in KMC through Keppel Energy Changi Business Park - 100% through Keppel DHCS Pte Ltd (“ Keppel DHCS”)
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