KGT – BT

K-Green sees solid first day

Keppel’s trust is the fourth most active stock with 33.6m shares traded

SINGAPORE’S first green infrastructure trust, K-Green Trust, put in a robust performance in the opening hours of its debut yesterday, before slipping to close lower.

The Singapore Exchange (SGX) said that it welcomed the new listing.

K-Green, Keppel Corp’s trust targeted at investing in green infrastructure projects here and globally, touched a high of $1.33 within the first half hour of its trading debut. It then slipped to close the day at $1.11.

The counter saw strong volumes yesterday, being the fourth most active, with a total of 33.6 million units changing hands.

‘Investors are keen on buying the stock mostly because of its good dividend yield and long-term prospects for the green business,’ a local trader told Reuters.

DBS Vickers has rated K-Green a ‘hold’, with a 12-month target price of $1.20.

K-Green owns three assets: the Senoko Waste-to-Energy Plant, the Keppel Seghers Tuas Waste-to-Energy Plant and the Ulu Pandan NEWater Plant. The Senoko and Keppel Seghers plants treat close to half of Singapore’s incinerable waste.

Keppel has said that K-Green’s objective is to invest in ‘green’ infrastructure assets in Singapore and globally, with a focus on Asia, Europe and the Middle East. The trust aims to provide ‘long-term, regular and predictable distributions to its unit holders’.

K-Green’s pro forma net book value, as at June 29, 2010, was about $719.4 million.

Thomas Pang, CEO of Keppel Infrastructure Fund Management Pte Ltd, trustee manager of K-Green Trust, said: ‘With growing awareness in environmental issues worldwide, there is greater demand for ‘green’ infrastructure assets. K-Green Trust is well-placed to capture these opportunities in the global drive towards sustainable development, therefore offering investors opportunities to participate directly in this growing market segment.’

Keppel did not raise any new funds with this listing. Instead, it distributed 325.9 million units in K-Green Trust to entitled shareholders of Keppel – one unit for every five Keppel shares held. The units had an implied value of $1.13 each.

This proposed dividend in specie forms part of Keppel’s total dividend of 61 cents per share that it is proposing to offer to shareholders for FY2009.

The distributed K-Green units represent 50.5 per cent of the total number of trust units. The remaining stake is held by K-Green’s sponsor, Keppel Integrated Engineering Limited.

A statement from the SGX after the close of trade yesterday said that it welcomed K-Green to the market. ‘It underlines our attractiveness as a listing venue for the fast growing sector of infrastructure assets in Asia,’ said Lawrence Wong, executive vice-president and head of listings at SGX.

According to SGX’s statement, K-Green is expected to have an estimated market capitalisation of $730 million.

Its listing brings the total number of infrastructure business trusts on SGX to three, with a combined market capitalisation of close to $1.5 billion.