Keppel Corporation is set to acquire Singapore Press Holdings Limited for USD $1.6billion (S$2.2bn).
Singapore Press Holdings owns a property portfolio comprising retail, student accommodation, senior living, and data center assets (Genting Lane). This acquisition will accelerate Keppel’s Vision 2030 plans to be an integrated business providing solutions for sustainable urbanisation, with an asset management arm to fund the Group’s growth and provide a platform for capital recycling, the company said.
Also, Singapore Press Holdings owns a 40 per cent stake in a joint venture, named Memphis 1 Pte Ltd, for the development of a new data centre to be located on Genting Lane in Singapore.
In June 2020, Keppel Data Centres Holdings (KDCH) and Singapore Press Holdings announced the 60-40 Memphis 1 joint venture for the development of a new data centre at 82 Genting Lane (Lot 6205N of Mukim 24) in Singapore.
Keppel and Singapore Press Holdings committed to contribute $286 million USD (S$400 million) in funds for both the initial land purchase ($36 million USD) and development capital expenditures ($250 million USD).
Keppel Group (includes Keppel DC REIT and Keppel Capital) and Keppel Data Centres own and operate 26 colocation data centres. Collectively, these facilities are operating in 10 countries and comprise in excess of 2 million sqft of area.
Loh Chin Hua, CEO of Keppel Corporation Limited said, “The proposed acquisition of SPH is very much in line with Keppel’s Vision 2030, where we seek to grow Keppel’s business as a provider of solutions for sustainable urbanisation through organic and inorganic options. This is a rare opportunity to acquire SPH’s non-media portfolio, which fits very well with Keppel’s business and growth strategy.
Given Keppel’s business model and focus areas, we are uniquely positioned to enhance and unlock the value of SPH’s portfolio. The two companies are already close partners in businesses such as M1, Prime US REIT and the development of the data centre at Genting Lane in Singapore. The acquisition would allow us to reap further synergies between Keppel and SPH, and also allow Keppel to enter the fast-growing PBSA sector and accelerate our expansion in senior living.”
The proposed acquisition is accretive to Keppel’s earnings on a pro forma basis and would boost its AUM as well as recurring income. “We have said before that Keppel does not need to hold all of our current 46 per cent stake in Keppel REIT. The utilisation of Keppel REIT units to partly satisfy the scheme consideration allows us to limit the impact to our gearing,” added Hua.
New growth engines
The acquisition of SPH will complement Keppel Land’s plans to move beyond a developer model to providing urban development solutions. It would also accelerate Keppel’s expansion into the highly resilient and fast growing student accommodation and senior living sectors, where SPH has established a strong track record and presence.
SPH’s PBSA business will provide Keppel with an immediate and sizeable foothold in the attractive United Kingdom market, which is underpinned by rising domestic and international demand for higher education.
The integration of SPH’s senior living business also adds to and diversifies Keppel’s senior living business in the United States under the Watermark brand, providing access to new markets in Singapore and Japan, said industry watchers.
J.P. Morgan (S.E.A.) was the sole financial adviser, and WongPartnership LLP was the legal adviser for the transaction.