Keppel Infrastructure Trust (KIT) in jolly ride

Sign up for only $19.99! My last article on Keppel Infrastructure Trust (KIT) was more than two years ago. Back then, the onset of pandemic had created much uncertainty and volatility for global stock markets. KIT unit price was not spared from the carnage. The resulting meltdown prompted the management to conduct shares buyback to halt the collapse of KIT unit price. By 3 April 2020, 4.75 million of KIT shares had been repurchased, restoring sanity for the counter.

Time flies. In the blink of an eye, Singapore has reopened its borders and eased most of the pandemic public health measures. As such, I do think it is time opportune to do an article on Singapore’s largest infrastructure business trust, Keppel Infrastructure Trust. Also, a member of SG Wealth Builder had requested for a stock analysis of Keppel Infrastructure Trust, which I would duly oblige.

In my view, the biggest relief for unitholders must be the end of saga for Keppel Infrastructure Trust’s asset – Basslink, which was placed under voluntary administration on 12 November 2021. The debt ridden Basslink operates an undersea cable in Australia and had been involved in a legal dispute with its customer Hydro Tasmania. To make things worse, Keppel Infrastructure Trust had been unable to sell the asset to white knight, APA Group. This caused Basslink to collapse. Arising from this, the Group classified Basslink as discontinued operation, with loss amounting to $162 million.

Despite the setback of Basslink, the Group wasted no time licking its wound as it embarked an astonishing acquisition spree within two years. On 23 February 2022, KIT completed the acquisition of an indirect minority and non-controlling stake in Aramco Gas Pipelines Company (“AGPC”). On 31 March 2022, Ixom completed the acquisition of 100% interest in Bituminous Products Holdings Pty. Ltd. On 31 May 2022, Ixom completed the acquisition of the assets of Aromatic Ingredients, a Melbourne-based wholesaler, blender and contract manufacturer of essential oils. On 30 June 2022, KIT completed the acquisition of the remaining 30% stake in SingSpring Desalination Plant.

And that’s not all. In August 2022, KIT announced two more acquisitions – a 52% interest in Eco Management Korea (EMK) and a 20.5% stake in in Borkum Riffgrund 2 (BKR2), a 465MW operating German offshore wind farm. In addition, the Sponsor, Keppel Infrastructure has recently acquired 800 Super Holdings Limited (800 Super), a Singaporean environmental services company. In time to come, this asset will also be divested to KIT. I suspect the reason for the acquisition spree could be linked to the Acquisition Fee that the Manager is entitled to. I will share more about this in the article below.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in KIT before. Whether KIT unit price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Keppel Infrastructure Trust and Sembcorp Industries

Based on the recent acquisitions, KIT could be using Sembcorp Industries as a [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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