Keppel DC REIT Announces Major Equity Fund Raising: What Investors Need to Know

Keppel DC REIT Management Pte. Ltd. has launched a significant equity fund raising effort, aiming to gather gross proceeds of approximately S\$1 billion. This move is part of a strategic initiative to finance new acquisitions and bolster the company’s financial position.

Key Details of the Equity Fund Raising

The equity fund raising will be conducted through three key methods:

• Private Placement: Issuance of new units to institutional investors, priced between S\$2.074 and S\$2.128 per unit, targeting proceeds of at least S\$600 million.
• Preferential Offering: Non-renounceable offering to existing unitholders, priced between S\$2.03 and S\$2.08 per unit, with a goal to raise approximately S\$300 million.
• Sponsor Subscription: Keppel DC Investment Holdings Pte. Ltd. will subscribe to units worth approximately S\$85 million at the Private Placement price.

Strategic Acquisitions and Financial Restructuring

The proceeds from this fund raising will primarily finance the acquisition of interests in two Singapore-based data centres, valued at S\$888.2 million, representing 98.7% of the total proceeds. An additional S\$11.8 million will cover related fees and expenses.

These strategic acquisitions are expected to enhance Keppel DC REIT’s portfolio by adding artificial-intelligence-ready hyperscale data centres, thereby increasing distribution per unit and providing avenues for future growth.

Implications for Shareholders

Keppel DC REIT’s initiative is designed to strengthen its balance sheet, reduce leverage from 39.7% to approximately 33.3%, and enhance financial flexibility. This move is expected to raise the company’s profile among investors and potentially increase the trading liquidity of its units by issuing approximately 466.9 million new units, representing a 27.1% increase in total units.

Regulatory and Approval Requirements

The fund raising is subject to several approvals, including from the Singapore Exchange Securities Trading Limited (SGX-ST). Keppel DC REIT has already secured in-principle approval for the issuance of new units, contingent on compliance with SGX-ST’s listing requirements and other conditions.

The entire undertaking is underwritten by major financial institutions including Citigroup Global Markets Singapore Pte. Ltd., DBS Bank Ltd., and others, ensuring full coverage of the equity fund raising.

Timeline and Further Announcements

The Private Placement is scheduled to conclude on November 20, 2024, with new units expected to commence trading by November 28, 2024. The Preferential Offering will open on December 2, 2024, and close on December 10, 2024. The Sponsor Subscription Units are expected to be issued in early 2025.

Keppel DC REIT will continue to update through SGXNET as the equity fund raising progresses.

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions. The information provided is based on current data and is subject to change.

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