KIFM to Acquire 39% Stake in Keppel Merlimau Cogen Plant for $100M

Why It Matters

The transaction secures a stable, yield‑generating asset for KIT’s investors while bolstering Singapore’s energy resilience and supporting the transition to lower‑carbon power generation.

Key Takeaways

• KIFM acquires additional 39% stake in Merlimau Cogen for US$100 M.
• KIT’s total ownership rises to 90% of the 1.3 GW plant.
• Plant supplies over 10% of Singapore’s electricity, operating since 2007.
• Upgraded turbines improve efficiency, cut emissions, and enable future hydrogen use.
• Deal expected to boost KIT’s DPU by 6% to $0.0418.

Pulse Analysis

Keppel Infrastructure Fund Management, acting as trustee‑manager of Keppel Infrastructure Trust, announced it will buy a further 39 % stake in the Merlimau Combined‑Cycle Gas Turbine plant for roughly US$100 million. The purchase lifts KIT’s direct and indirect ownership to 90 % of the 1.3 GW facility on Jurong Island, with the remaining 10 % retained by Keppel’s Infrastructure Division. The plant, Singapore’s first independent power project, has been online since 2007 and currently provides more than 10 % of the city‑state’s electricity demand. The transaction, pending regulatory clearance and unitholder approval, is expected to close by Q4 2026.

The acquisition aligns with Keppel’s capital‑recycling agenda and underscores the growing appetite for stable, yield‑focused infrastructure assets. Recent upgrades to two of the plant’s gas turbines have boosted thermal efficiency and trimmed emissions, positioning the facility for a potential transition to hydrogen‑compatible generation. The plant’s emissions reductions align with Singapore’s Net‑Zero by 2050 roadmap, making it a benchmark for regional gas‑to‑green transitions. With a long‑term capacity‑tolling contract extending to 2040, the plant enhances Singapore’s energy resilience while offering KIT a predictable cash‑flow stream amid a volatile power market.

Financially, the deal is projected to lift KIT’s distribution per unit to $0.0418, a 6 % increase over the 2025 baseline, reinforcing the trust’s dividend appeal. Funding will be sourced from a blend of internal cash and external borrowings, reflecting prudent balance‑sheet management. Analysts view the transaction as a vote of confidence in Singapore’s gas‑fired generation fleet and a signal that infrastructure investors are seeking assets that can adapt to decarbonisation pathways while delivering steady returns. By redeploying proceeds into emerging renewable projects, Keppel aims to diversify its portfolio and capture growth in Asia’s clean‑energy market.

Deal Summary

Keppel Infrastructure Fund Management (KIFM), as trustee‑manager of Keppel Infrastructure Trust, signed an agreement to purchase a 39% stake in the Keppel Merlimau Cogen Plant from Keppel Core Infrastructure Fund for up to S$128.1 million ($100 million). The deal will raise KIFM’s ownership to 90% of the 1.3 GW combined‑cycle gas turbine facility, with the remaining 10% retained by Keppel’s Infrastructure Division. The transaction is subject to regulatory approval and unitholder consent.