Keppel Corporation and Keppel Infrastructure Trust to Jointly Invest in European Onshore Wind Energy Portfolio

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Keppel Corporation Limited (Keppel Corporation) and Keppel Infrastructure Fund Management Pte Ltd (KIFM) , as Trustee-Manager of Keppel Infrastructure Trust (KIT), are pleased to announce that they are jointly committing €160 million (approximately S$233.6 million) for a 33.33% stake in a joint investment vehicle (FundCo), alongside Kommunal Landspensjonskasse (KLP) and MEAG MUNICH ERGO Asset Management GmbH (MEAG), acting for entities of Munich Re Group including ERGO, which will be co-investing in 49% of a portfolio of existing and pipeline onshore wind energy assets across Norway, Sweden and the United Kingdom (Projects) sponsored by Fred. Olsen Renewables AS (FORAS). FORAS, a leading developer, operator, and owner of renewable energy assets, will hold the remaining 51% stake in the Projects.

KLP is Norway’s largest pension fund, with assets under management (AUM) more than NOK 900 billion (approximately S$127 billion) as at 31 March 2022. MEAG is a leading global asset manager, with AUM of €330 billion (approximately S$482 billion) as at 31 March 2022. MEAG is part of Munich Re, one of the world’s leading providers of reinsurance, primary insurance and insurance-related risk solutions. It is intended that KLP and MEAG will each commit €160 million (approximately S$233.6 million) for a 33.33% stake in the FundCo.

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FundCo will initially co-invest in 49% of three operating wind farms in Sweden and Norway with a combined generating capacity of 258 MW (Initial Portfolio). FundCo will further have a five-year exclusive right and obligation to co-invest in 49% of all FORAS’ eligible pipeline of onshore wind energy assets (1.3GW) in Sweden and the United Kingdom when they achieve final investment decision, up to a total capital commitment of €480 million (approximately S$700.8 million).

The transaction will mark Keppel Corporation’s expansion in the wind energy business, and will contribute to Keppel’s Vision 2030 plans to grow the Group’s portfolio of renewable energy assets. The transaction will also mark KIT’s first investment in the renewable energy sector, as well as contribute to KIT’s target of increasing exposure in renewable energy by up to 25% of equity-adjusted AUM by 2030. Upon the completion of this investment, the Keppel Group would have a total renewable energy portfolio of approximately 1.8 GW, including assets under development.

According to the European Commission, the EU plans to cut net greenhouse gas emissions by at least 55% and has proposed to increase its current target for renewable sources from at least 32% by 2030 to at least 40%. Against this backdrop and rising demand for more electricity arising from the electrification of industrial and transport sectors[4], the outlook for wind, alongside other renewable energy sources, is expected to be positive.

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Mr Loh Chin Hua, CEO of Keppel Corporation, said, “Keppel’s investment in this onshore wind portfolio, alongside other sterling investors, reflects our focus on making sustainability our business and contributing to the global efforts to combat climate change. The investment will provide Keppel not only with stable recurring income from the operating assets, but also a strong deal flow pipeline in well-established markets in the Nordics and the UK. We look forward to further strengthening our partnership with KLP and MEAG, as well as Fred. Olsen to build a sustainable future.”

Mr Jopy Chiang, CEO of KIFM, said, “This investment marks KIT’s first investment in the renewable energy sector, and our maiden acquisition in Europe. The Nordic region is one of the most mature renewables markets globally. This momentum of demand for green energy is growing rapidly and is reshaping the energy landscape worldwide. We will continue our focus to seek out quality investment opportunities in this space and help support economies with their energy transition journeys.”

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The proposed co-investment in the Initial Portfolio is expected to be completed by 3Q2022. KIT intends to fund its commitment of approximately €131 million (approximately S$191.6 million) with an optimum combination of internal sources of funds, proceeds from equity and/or debt capital market issuances and/or external borrowings. Assuming all commitment is utilised, KIT’s enlarged portfolio will grow from S$4.5 billion in March 2022 to S$4.7 billion.

This transaction is expected to support KIT’s overall distributable income per unit accretion. The above development is not expected to have any material impact on the net tangible assets per share or earnings per share of Keppel Corporation for the current financial year.

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