Key Investment Attractions

KEPPEL INFRASTRUCTURE TRUST (KIT) offers Unitholders the following key investment benefits:

1. A listed infrastructure business trust with potential for long-term capital growth

The investment mandate of KIT is to invest in businesses/ assets that generate long term cash flows with some growth.

The trust offers investors the opportunity to invest in a steadily growing infrastructure sector, as increasing urbanisation worldwide continues to create demand for energy infrastructure, energy efficiency, waste management, water reclamation and other sustainable development solutions.

Infrastructure businesses are attractive as an investment class because they typically display characteristics with some or all the attributes listed below and as a result, may provide Unitholders with long-term, regular and sustainable cash flows.

2. Diversified portfolio of core infrastructure businesses that generate long-term, regular and sustainable cash flows

KIT offers its Unitholders and investors the opportunity to invest in a diverse portfolio of core infrastructure businesses (ranging from waste treatment, water production, power production and transmission, piped gas production retailing to telecommunications) located in jurisdictions with well-developed legal frameworks that support long-term infrastructure developments.

Apart from City Gas, the other businesses in KITís portfolio generate steady availability-based payments through long-term contracts with customers of good credit such as government-owned or -linked companies.

City Gas, by virtue of it being the sole provider of town gas in Singapore, its customer base of over 700,000 households and businesses, and the relatively stable demand for town gas, has been able to generate steady recurring revenue.

In view of the above, KIT expects to generate long-term, regular and sustainable distributions for Unitholders.

3. Flagship investment vehicle for Singapore infrastructure

KIT is the second largest business trust in terms of total assets and market capitalisation and is the flagship investment vehicle for investors seeking exposure to Singapore infrastructure.

In addition, KITís scale better positions the trust to pursue meaningful acquisition opportunities and provides it with more flexibility to execute its growth strategies.

4. Synergistic relationship with the Keppel Group and support from an established sponsor

As part of the Keppel Groupís efforts to grow its asset management business, Keppel Corporation consolidated its interests in business trust, real estate investment trust and fund management businesses under Keppel Capital in July 2016. This includes the shareholding interest in the Trustee-Manager.

As a member of Keppel Capital, the Trustee-Manager can leverage and grow further with the increased scale, larger investor base, wider geographical coverage and greater resources. The larger platform will also enhance talent recruitment and retention, facilitate sharing of best practices and improve operating efficiency.

Other benefits include:

  • Co-investment, bridge financing and incubation opportunities; and
  • Non-energy and non-environmental space asset management.

Keppel Infrastructure (KI) is the Sponsor and single largest Unitholder of KIT. A division of Keppel Corporation, KI drives the Keppel Groupís strategy to invest in, own and operate competitive energy and environmental infrastructure solutions and services.

To demonstrate its commitment to KIT, KI has granted KIT certain rights of first refusal pursuant to a Deed of Right of First Refusal (ROFR) under which the trust has the first right to acquire present and future infrastructure assets owned by KI, which will help create a pipeline of potential acquisition opportunities for the trust.

KIT also benefits from KIís sponsorship in the following ways:

  • Draw on KIís operational and maintenance, as well as industry expertise;
  • ROFRs for assets owned and developed by the Sponsor; and
  • Co-investment and incubation opportunities.
5. Experienced management team and Board of Directors

The Board of Directors and the management team of the Trustee-Manager comprise individuals with relevant credentials, expertise and experience in various fields and in the regional markets. They also have experience working in senior management positions in or serving on the boards of public-listed companies.

6. Tax-efficient and conservative capital structure

Under the Qualifying Project Debt Securities incentive scheme, interest income received by KIT from the Trusts is exempt from Singapore income tax and is also not subject to Singapore withholding tax.

KIT will fund future acquisitions using a financing structure that allows the trust to achieve its investment strategy of distributing long-term, regular and sustainable cash flows to Unitholders.

The debt structure of KIT ensures that all of its assets and businesses have sufficient financial flexibility to meet its capital expenditure and operational needs, and simultaneously, service its debt obligations promptly and reliably. The trust intends to maintain its optimal capital structure to provide it with the flexibility to execute its growth strategies.

7. Fee structure aligns interests of the Trustee-Manager and Unitholders

In consideration for the provision of services to KIT, the Trustee-Manager is entitled under the Trust Deed to a base management fee and a performance fee linked to the cash flows received by the trust. This fee structure aligns the interests of the Trustee-Manager with those of Unitholders by incentivising the Trustee-Manager to grow the distributable income and actively manage the asset base of the trust.

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