SINGAPORE – Keppel DC Reit is planning to raise an estimated $473.8 million to partially pay for the acquisition of two data centres, one of which Keppel Infrastructure Trust (KIT) has a 51 per cent stake in, its manager announced on Monday (Sept 16).

The proposed equity fundraising comprises a private placement of 135 million new units in Keppel DC Reit at an issue price that is between $1.703 and $1.744 per unit, to raise gross proceeds of between $229.9 million and $235.4 million; as well as a preferential offering at an issue price of between $1.67 and $1.71 per unit, to raise between $238.4 million and $243.9 million.

The private placement issue price range represents a discount of between 2.5 per cent and 4.8 per cent to the volume-weighted average price (VWAP) of $1.7882 per unit of all trades on the Singapore Exchange for the preceding market day on Sept 13, before the underwriting agreement was entered into, while the preferential offering issue price range represents a discount of between 4.4 per cent and 6.6 per cent to the VWAP.

The issue price per new unit for the private placement will be determined by the manager and the joint underwriters following a book-building process, and the issue price for the preferential offering will be determined once the private placement issue price has been finalised, the manager said.

DBS Bank, Citigroup Global Markets Singapore and Credit Suisse (Singapore) have been appointed as the joint bookrunners, while DBS Bank, Citigroup Global Markets Singapore, Credit Suisse (Singapore) and CLSA Singapore have been appointed as the joint underwriters for the equity fundraising.

The private placement has been launched on Sept 16, with listing for the new units from the placement slated for 9am on Sept 25.

Separately, books closure date for the eligibility to participate in the preferential offering stands at 5pm on Sept 24. The opening date for the preferential offering has been indicated at 9am on Sept 27, with new units from the preferential offering to be listed at 9am on Oct 15, the manager of Keppel DC Reit said.

It added that the actual amount of gross proceeds raised may be more or less than $473.8 million, as this depends on the final issue price of the private placement and preferential offering, as well as the preferential offering ratio.

Subject to relevant laws and regulations, the manager intends to use $438.6 million, or 92.6 per cent of the gross proceeds from the equity fundraising to partially fund the proposed acquisition of a 100 per cent interest in 1-Net North Data Centre, and a 99 per cent stake in another data centre, Keppel DC Singapore 4.

About $26.7 million or 5.6 per cent of the gross proceeds will be used to fund capital expenditure, while $8.5 million, or 1.8 per cent will be used to pay estimated fees and expenses related to the equity fundraising. The remainder, if any, will be used for general corporate purposes.

In a separate statement on Monday, KIT’s manager noted that the trust’s subsidiary, CityDC, is divesting its 51 per cent stake in DataCentre One to Keppel DC Reit for $102.9 million. The remaining 49 per cent held by WDC Development (WDC), a subsidiary of Shimizu Corporation, will also be acquired by Keppel DC Reit for $98.9 million.

DataCentre One is a joint venture company formed in June 2014 between CityDC and WDC to develop, build and lease 1-Net North Data Centre (1-Net North DC).

The estimated deal amount of $201.8 million is payable in cash, and is based primarily on the adjusted net asset value of DataCentre One.

This amount includes $200.2 million as the agreed value of 1-Net North DC, $33.8 million in shareholder loans owed by DataCentreOne to the sellers, less $32.2 million being the adjustments for DataCentre One’s adjusted net liabilities.

1-Net North DC is a five-storey purpose-built facility located just outside the Woodlands Regional Centre at 18 Riverside Road.

In June 2019, CityDC launched a tender for the sale of 1-Net North DC. The bids received were evaluated based on multiple criteria, and Keppel DC Reit was selected as the preferred bidder.

Matthew Pollard, chief executive officer of KIT’s trustee-manager, said: “The divestment allows KIT to realise the remaining lease value in DataCentre One upfront, thus benefiting unitholders.

“Proceeds from this divestment are expected to be redeployed into quality acquisitions that will strengthen KIT’s portfolio, as well as for refinancing purposes and working capital needs.”

KIT intends to use part of the consideration for the repayment of DataCentre One’s loans. Accordingly, the estimated net proceeds to be received by KIT is $51.3 million, subject to adjustments at completion of the transaction.

Among other things, the divestment is conditional upon the approval of KIT’s unitholders at an extraordinary general meeting to be convened. It is also expected to increase KIT’s earnings per unit for the financial year ended Dec 31 when completed, the trustee-manager said.