Keppel Infrastructure Fund Management (KIFM), as trustee-manager of Keppel Infrastructure Trust (KIT), has signed an agreement to acquire an additional 39% stake in the Keppel Merlimau Cogen Plant (KMC) in Singapore from Keppel Core Infrastructure Fund (KCIF) for up to approximately S$128.1m ($100m).
Following this transaction, KIT will directly and indirectly hold a total 90% interest in the 1.3GW combined-cycle gas turbine facility on Jurong Island, while the remaining 10% will stay with Keppel’s Infrastructure Division.
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The plant currently supplies more than 10% of Singapore’s power needs and entered operation in 2007 as the country’s first independent power project.
The proposed acquisition is subject to several conditions precedent including regulatory approval and acceptance by KIT unitholders at an upcoming extraordinary general meeting.
KIFM plans to finance the purchase using a mix of internal funds and external borrowings.
KMC, which features a long-term supply contract with Keppel’s Infrastructure Division, has undergone upgrades over the past four years to two of its gas turbines, improving operational efficiency and reducing emissions.
These enhancements are designed to extend the plant’s operational lifespan and prepare it for future shifts in energy production including compatibility with hydrogen use.
If the acquisition had taken effect from the beginning of 2025 through to year-end, KIT’s distribution per unit (DPU) would have reached $0.0418, a 6% increase over the previous DPU of $0.0394 for the 2025 financial year.
The transaction also forms part of Keppel’s ongoing capital recycling strategy and value realisation process, allowing redeployment of funds into other investments.
Keppel deputy CIO and Keppel Infrastructure CIO Jopy Chiang said: “The proposed sale of KCIF’s stake in Keppel Merlimau Cogen Plant to KIT reflects our ability to create value for multiple stakeholders by leveraging Keppel’s power generation capabilities.
“Supported by a long-term capacity tolling agreement with Keppel’s Infrastructure Division through 2040, KMC is well positioned to deliver stable yields for KIT’s unitholders.
“In addition, as the operator of KMC, Keppel remains committed to maintaining a high level of operational efficiency, which not only allows us to achieve quality returns but also contribute to Singapore’s energy resilience.”
