Keppel banking on energy transition, AI for future growth: CEO

SINGAPORE – Investors in Keppel can expect more dividends in the coming years as the group continues selling non-core assets through 2030, while positioning for longer-term growth from an asset-light strategy.

Proceeds from these asset sales are being used to pay dividends, reduce debt and fund new investments, supporting both near-term shareholder returns and Keppel’s next phase of growth in infrastructure tied to cleaner energy and digitalisation.

In Keppel’s annual report released on March 26, chairman Danny Teoh said the firm has remained “laser focused” during its 2025 financial year on optimising the pace of divestment and the exit value of Keppel’s assets.

It aims to become an asset-light global asset manager and operator, and has announced that it monetised about $2.9 billion in assets in 2025, including the proposed sale of M1’s telco business, which is pending regulatory approval.

In August 2025, Keppel announced that it was to sell M1 to telco Simba. Keppel was to receive about $1 billion in cash.

At the end of 2025, Keppel’s total asset monetisation since 2020 had reached about $14.5 billion.

Mr Teoh said Keppel will continue to work towards substantially monetising its non-core portfolio by the end of 2030.

He added that the value unlocked from monetisation will put Keppel in good stead to fund its growth, reduce debt and return capital to shareholders.

Given the $1.6 billion of asset monetisation that Keppel completed in 2025, the board proposed a special dividend of 13 cents per share.

It also proposed a final ordinary cash dividend of 19 cents per share, bringing the full-year ordinary cash dividend to 34 cents per share.

Hence, the total dividend for FY2025 amounts to about 47 cents per share, which is 38 per cent higher year on year.

This is much higher than the 10 cents per share total dividend that was proposed in FY2020, the year that Keppel first announced its asset monetisation strategy.

Chief executive Loh Chin Hua said: “At the outset, our objectives have been to lighten our balance sheet, unlocking capital for growth, to reduce debt and reward shareholders.

“By placing clear markers along our transformation journey, including linking special dividends to completed monetisation, we... send a clear signal to the market on our commitment to monetise the non-core portfolio and to reward shareholders from a part of the proceeds from monetisation.”

As at end-2025, Keppel has another $13.5 billion of non-core assets that it aims to divest substantially by 2030.

Mr Loh added that Keppel has reinforced this shift to being asset-light by distinguishing the earnings of New Keppel from its non-core portfolio, which includes legacy offshore and marine assets.

In FY2025, New Keppel reported a net profit of $1.1 billion, up 39 per cent year on year, with strong contributions across all segments.

Its infrastructure segment remains its largest earnings pillar, and helps position it ahead of the energy transition, Mr Loh said.

“Looking ahead, demand for reliable power, cleaner energy and grid decarbonisation will continue to expand, particularly with the rise in digitalisation and AI,” he noted.

“Our early positioning in expanding generation capacity, cross-border renewable energy imports and low carbon energy vectors gives us strategic relevance in the energy transition.”

Mr Loh added that digitalisation and artificial intelligence are reshaping infrastructure demand. This means the next phase of growth will require solutions that combine energy and connectivity at scale.

Keppel has positioned itself early across the digital infrastructure value chain through cleaner energy, data centres, subsea connectivity and multi-faceted investment solutions, he said.

“Our approach has been to secure critical enablers ahead of demand, such as access to power, land and fibre in key data hubs, and commit capital through our private funds when customer visibility is clear.”

In 2025, Keppel started commercial traffic on the Bifrost Cable System, which is the world’s first subsea cable system that directly connects Singapore to the west coast of North America via Indonesia through the Java Sea and Celebes Sea. It is designed to support AI workloads, cloud-native platforms and real-time digital services.

Keppel also expanded its AI-ready capabilities and grew its Asia-Pacific data centre powerbank to over one gigawatt.

It is also preparing to develop its floating data centre project in the first half of 2026.

Keppel wants to both enable AI infrastructure and be enabled by AI as an asset manager, Mr Loh said.

He added that Keppel provides the critical infrastructure that AI requires, which demands substantial capital.

“Our asset-light model allows us to mobilise funds raised from our limited partners, alongside our sponsor capital and co-investments, to deliver infrastructure at scale.”

While Keppel supports the growth of AI, it also embeds AI in its enterprise, with in-house AI agents who provide investment insights and help with the design and operation of complex infrastructure and data centre projects.

Mr Loh added that as the new Keppel scales, it will not be relying primarily on its balance sheet to fund expansion, but growth will also be driven alongside third-party capital through its private funds.

Analysts said they were positive on Keppel’s pivot to an asset-light model.

Morningstar senior equity analyst Xavier Lee said these moves should support value realisation and structurally higher returns on equity over time.

“The management’s intention to distribute 10 per cent to 15 per cent of the gross value from monetised assets within the financial year is also encouraging, signalling a more disciplined and shareholder-friendly capital management approach,” he said.

However, he added that Keppel’s current share price already reflects much of this positive transformation, and there might be limited upside at present valuations.

OCBC Bank equity research analyst Chu Peng added that dividend sustainability is also supported by improved earnings visibility from New Keppel and disciplined capital recycling.

She currently has a “buy” rating on the stock and a fair value estimate of $13.60 on the counter.

“Keppel is well positioned to benefit from strong demand for data centres, subsea cables and power infrastructure, driven by the digitalisation and AI wave,” she said.

Keppel closed down 1.4 per cent at $12.27 on March 26.