Keppel DC REIT Announces S\$1 Billion Equity Fund Raising: Strategic Moves to Strengthen Financial Position

Keppel DC REIT Management Pte. Ltd., in its capacity as manager of Keppel DC REIT, has announced a major equity fund raising initiative aimed at generating approximately S\$1 billion in gross proceeds. This strategic move comprises a combination of private placements, preferential offerings, and sponsor subscriptions, all designed to bolster the financial structure of Keppel DC REIT and support future growth opportunities.

Key Points of the Equity Fund Raising

• The equity fund raising involves issuing new units to raise no less than approximately S\$985 million, broken down into:
  • S\$600 million via private placement to institutional and other investors.
  • S\$300 million through a non-renounceable preferential offering to entitled unitholders on a pro rata basis.
  • S\$85 million through sponsor subscription by Keppel DC Investment Holdings Pte. Ltd. (KDCIH).
• The private placement issue price range is set between S\$2.074 and S\$2.128, while the preferential offering price ranges between S\$2.03 and S\$2.08.
• The proceeds will primarily finance the proposed acquisition of interests in two data centers in Singapore, with approximately 1.3% allocated for fees and expenses.

Shareholder Considerations

Investors should be aware that this substantial equity fund raising could impact share values. The increase in the total number of units, approximately 466.9 million new units, represents an increase of about 27.1% of currently issued units. This could enhance the trading liquidity of the units and raise the profile of Keppel DC REIT among investors.

Potential Benefits and Strategic Importance

• The fund raising will allow Keppel DC REIT to strategically add artificial-intelligence-ready hyperscale data centers in Asia’s top data center hub.
• It promises immediate distribution per unit accretion and provides multiple levers for further growth via rental uplifts and capacity expansion.
• The initiative is expected to strengthen Keppel DC REIT’s balance sheet, decrease aggregate leverage from approximately 39.7% to 33.3%, and enhance financial flexibility.

Regulatory Approvals and Timelines

Approval in principle has been obtained from the Singapore Exchange Securities Trading Limited (SGX-ST) for the issuance of new units. The private placement is scheduled to close on 20 November 2024, with the listing of new units expected on 28 November 2024. The preferential offering will open on 2 December 2024 and close on 10 December 2024.