Keppel is selling its One Paramount office complex in Chennai
Keppel Ltd on Thursday said first-half net profit rose 25 percent year-on-year to S$431 million ($333 million) on strength in the Singaporean conglomerate’s real estate and infrastructure businesses.
The profit figure excludes the group’s non-core portfolio for divestment, underscoring Keppel’s asset-light strategy and focus on recurring income growth, the Temasek-backed asset manager said in a release.
Annualised return on equity excluding the non-core portfolio stood at 15.4 percent at the end of June, up from 13.2 percent a year earlier, as recurring income during the six-month period grew 7 percent year-on-year to S$444 million. The real estate division posted an attributable net profit of S$97.6 million, reversing a year-earlier loss of S$19.6 million.
Styling the leaner group as the New Keppel, CEO Loh Chin Hua hailed the interim results as evidence that the SGX-listed company could produce strong earnings “from only a part of our balance sheet”, indicating significant untapped value in unutilised assets.
“By reporting the non-core portfolio separately, we aim to provide greater transparency on our performance as a global asset manager and operator,” Loh said. “Looking ahead, we will focus on accelerating the growth of the New Keppel and monetising the S$14.4 billion non-core portfolio, which includes S$2.9 billion of embedded cash and receivables.”
Unlocking Capital
Keppel’s non-core portfolio for divestment comprises legacy offshore and marine assets, residential landbank, select real estate projects and investment properties, hospitality and logistics assets, associated cash and receivables, and other items not aligned with the group’s strategic focus as an asset-light fund manager.
Keppel Ltd CEO Loh Chin Hua
By unlocking capital from the non-core portfolio, Keppel will gain scope to reduce debt and reward shareholders, according to the group, which also revealed plans to buy back S$500 million in shares and pay an interim dividend of 15 Singapore cents. Including the effects of the non-core portfolio, overall net profit for the first half rose 24 percent year-on-year to S$378 million.
Keppel highlighted its divestment of S$915 million in assets during the year to date, raising the cumulative total to S$7.8 billion since the monetisation programme began in October 2020. The group expects to finalise talks on a further S$500 million in transactions during the second half.
Keppel is in the process of raising S$477 million from the sale of property assets and investments in India and Vietnam, according to a separate announcement. The pending disposals include the S$379 million sale of One Paramount, a Chennai office complex acquired last year from a joint venture of Canadian pension giant CPPIB and India’s RMZ for INR 22 billion (then $263 million).
“By working closely with our operating divisions, we have been able to identify and structure transactions to optimise divestment speed and exit value,” said Lee Kok Chew, who heads Keppel’s monetisation task force. “This latest milestone reflects our disciplined approach and strong commitment to deliver on Keppel’s asset monetisation goals.”
War Chest Grows
As part of its fund management transition, Keppel in April announced capital commitments totalling S$2 billion ($1.5 billion) for its latest data centre and education asset vehicles and an existing strategy focused on sustainable urban renewal.
The funding haul included a $580 million first closing on capital raised for Keppel Data Centre Fund III, which will invest in hyperscale-focused Asia Pacific digital infrastructure.
Keppel also reached a $307 million first closing of its second education asset fund and secured S$760 million in further commitments for its sustainable urban renewal strategy. The three vehicles represent S$4.9 billion in funds under management, with the Singaporean firm aiming to reach S$100 billion in FUM by 2026 and S$200 billion by 2030.