Keppel Infrastructure Trust, CitySpring Infrastructure Trust to combine into mega trust

Singapore - A mega deal has been announced between Keppel Infrastructure Trust (KIT) and CitySpring Infrastructure Trust (CIT) that would potentially create Singapore's second-largest business trust.

The two Singapore-listed trusts said after markets closed on Tuesday that CIT will acquire all the business undertakings and assets of KIT, in exchange for 1.33 billion new units of CIT.

Each KIT unitholder will receive 2.106 new CIT units for every KIT unit held.

The swap ratio was arrived at based on KIT's average market capitalisation of $658 million and CIT's average market capitalisation of $753 million over the past six months.

If the deal is finalised, CIT will be renamed Keppel Infrastructure Trust, with KIT's current manager Keppel Infrastructure Fund Management appointed the manager of the combined trust.

Separately, KIT also said it will acquire a 51 per cent stake in Keppel Merlimau Cogen for $510 million from its sponsor Keppel Infrastructure Holdings.

Keppel Merlimau Cogen owns a gas turbine power generation facility on Jurong Island, which will form part of the combined entity.

The purchase will be financed by an equity fund raising exercise.

The enlarged entity will have assets of over $4 billion and will create the largest Singapore infrastructure-focused business trust and the second-largest business trust listed here.

Before the completion of the deal, existing CIT unitholders will receive a one-time distribution of $30 million.

The combined trust will also make a one-time $30 million distribution to its expanded base of unitholders after the completion of the deal.

The proposed deal is subject to the approval of minority unitholders of KIT and CIT.

Substantial shareholders Keppel Corp and Temasek Holdings will abstain from voting.

Based on the trusts' latest annual reports, Temasek held a 37.41 per cent stake in CIT, while Keppel Corp owned 49.17 per cent of KIT.

Temasek also owned 20.47 per cent of Keppel Corp.

Upon completion of the deal, Keppel Corp will hold a 22.9 per cent stake in the combined entity, while Temasek will become the second largest unitholder with an interest of about 19.97 per cent.

Shares of the two trusts have been halted since last Friday.