Keppel DC REIT plans to invest $87 million in M1’s network assets, according to a joint media release dated April 28

M1, a subsidiary of Keppel Corporation, and the manager of the REIT have signed a non-binding term sheet with respect to the proposed investment by Keppel DC REIT into a special purpose vehicle (SPV) which will own and operate M1’s current mobile, fixed and fibre assets.

M1 will establish the SPV, which will acquire the network assets for a cash consideration of some $580 million based on the net book value of the assets as at end-February.

The consideration will be funded by external financing of $493 million and Keppel DC REIT’s investment of approximately $87 million. The REIT will be issued a combination of debt securities and preference shares in the SPV, while M1 will retain 100% interest in the ordinary shares.

The SPV will also enter into a 15-year network service agreement with M1, under which the SPV will contract its network capacity to M1, and M1 will undertake the operations and maintenance of the network assets. Both M1 and Keppel DC REIT will have equal representation on the board of the SPV.  

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Manjot Singh Mann, CEO of M1, says the proposed transaction involving M1’s network assets is part of the Keppel Group’s asset-light business model under Vision 2030. “Realising value from M1’s network assets will free up capital that can be used to help M1 invest in new capabilities and also fund other growth initiatives,” he says.  

Anthea Lee, CEO of the manager of Keppel DC REIT, believes the transaction will add to the growth and cashflow stability for the REIT. “It also allows us to gain a foothold in Singapore’s connectivity landscape, which we can leverage when seeking further opportunities for real estate and assets that support the digital economy,” she adds.

 Definitive agreements are expected to be signed in due course.

Shares in Keppel Corporation 2 cents or 0.36% lower at $5.50 on April 28, while units in Keppel DC REIT closed flat at $2.73.