SINGAPORE – Shares of Hongkong Land closed higher last week after the property group
unveiled a new $8 billion Singapore private real estate fund
and said it will inject its stakes in Marina Bay Financial Centre (MBFC) Towers 1 and 2 and One Raffles Quay into the vehicle.
The stock closed at US$7.17 on Dec 12, up 7.34 per cent from the previous week’s closing price of US$6.68.
The fund will focus on managing prime commercial property assets in the Republic and is expected to be the largest private real estate fund here.
The announcement of its launch came a day after the sale of its $1.45 billion stake in MBFC Tower 3 to Keppel Reit on Dec 11.
To fund the acquisition, Keppel Reit launched an underwritten non-renounceable preferential offering to raise about $886.3 million.
An underwritten non-renounceable preferential offering gives existing shareholders the right to buy new shares – typically at a discount – but they cannot sell or transfer this right. If shareholders choose not to subscribe, their ownership may be diluted and the underwriter will take up any unsubscribed shares.
Upon completion of the deal, expected on Dec 31, Keppel Reit’s existing one-third interest, together with the acquired interest, will result in it holding an aggregate two-thirds interest in MBFC Tower 3.
Shares of Keppel Reit closed 7.69 per cent lower at 96 cents on Dec 12, from Dec 5’s closing price of $1.04.
Shares of Sembcorp Industries closed down 1.17 per cent to $5.92 on Dec 12, from the previous week’s close of $5.99.
The company on Dec 11 said that it will
fully acquire Australian power company Alinta Energy
from Chow Tai Fook Enterprises for an agreed enterprise value of A$6.5 billion (S$5.6 billion), which represents the total value of the business, including its debt.
The estimated purchase price is approximately A$5.6 billion and will be paid in cash through Sembcorp’s bridge and working capital facilities.
In its bourse filing, the company said that the move will bring “meaningful scale and diversification” to its portfolio across renewables, energy storage and gas assets.
Citi Research analyst Luis Hilado in a Dec 11 note pointed out, however, that the acquisition includes Alinta’s 1.2 gigawatt (GW) coal-fired power plant, which will “initially” take Sembcorp’s decarbonisation targets “backwards”.
This implies that Alinta’s coal assets could raise near-term emissions and lead to slow progress towards the company’s existing emissions goals.
However, Sembcorp said the primary focus of the acquisition is gaining access to an attractive portfolio of development opportunities – comprising 10.4GW of renewables and firming systems – rather than the coal-fired power plant.
Mr Hilado kept his “buy” call on Sembcorp Industries with a $7.84 target price, while citing potential downside risks such as execution challenges in renewable energy projects.
Separately, a consortium of Seatrium and energy firm GE Vernova announced on Dec 11 that it has won a contract from European grid operator TenneT to build key parts of BalWin5, a project that will bring 2.2GW of wind power from the North Sea to Germany’s electricity grid.
