There’s A New Keppel Infrastructure Trust In Town – Is It Worth Looking At?

CitySpring Infrastructure Trust (SGX: A7RU) has completed the full acquisition of Keppel Infrastructure Trust and today marks the first day of trading for the newly-enlarged trust.

With the acquisition done, the old Keppel Infrastructure Trust has adopted the new name of Crystal Trust (SGX: LH4U) while the combined entity of CitySpring Infrastructure Trust and the old Keppel Infrastructure Trust has been renamed as Keppel Infrastructure Trust.

CitySpring Infrastructure Trust had issued 1.33 billion new units of itself to the old Keppel Infrastructure Trust as payment for buying over all the assets and liabilities of the old Keppel Infrastructure Trust. The new units were issued at a price of S$0.496 each.

Currently, the enlarged trust (the new Keppel Infrastructure Trust) has nine assets that are collectively worth more than S$4 billion; this makes it the largest infrastructure-focused business trust listed in Singapore. The nine assets include the Keppel Merlimau Cogen Plant, a 1,300 megawatt gas-fired power plant which the trust is in the process of acquiring.

With all these as a backdrop, what might investors make of the new trust?

On that matter, it’s interesting to point out that both Keppel Infrastructure Trust and CitySpring Infrastructure Trust had experienced declining revenue and profit over the past few years prior to the acquisition. You can see this in charts below (click for larger image):

Cityspring Infrastructure Trust and Keppel Infrastructure Trust's financials

Source: S&P Capital IQ

It is still too early to tell if the new Keppel Infrastructure Trust is able to reverse the falling revenues and profits. It might be the largest infrastructure trust in Singapore now, but most of its nine assets operate independently of one another; there does not seem to be much synergistic benefits or cost-savings that can be wrung out by placing all nine assets under one corporate roof.

Keppel Infrastructure Trust started trading today at S$0.55 per unit.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any companies mentioned.