Singapore’s Keppel Corporation on Wednesday announced plans to transform from a conglomerate into a global fund manager, with a goal of increasing assets under management to S$200 billion ($150 billion) by 2030.
Keppel, whose largest shareholder is state investment firm Temasek, will unify a business currently split between energy and environment, property development, digital infrastructure and asset management divisions to form a horizontally integrated model comprising fund management, investment and operating platforms, the group said in a release.
The business transition for the parent company of developer Keppel Land and mobile phone operator M1 parallels a restructuring undertaken by Keppel’s Temasek stablemate CapitaLand almost two years ago in which the real estate giant privatised its capital-intensive development division while listing its fee-generating investment management unit.
“This latest restructuring reflects a fundamental shift in how we organise ourselves to operate in a nimbler manner and harness technology to grow at speed and scale,” said Keppel Corporation CEO Loh Chin Hua.
Streamlining the Ship
As part of the transition, Keppel has set new interim targets to boost AUM to S$100 billion — double the current level — and increase its cumulative asset monetisation to S$10 billion-S$12 billion by the end of 2026.
The company is already one of Singapore’s largest fund managers, with its Keppel Capital division owning private fund management division Alpha Investment Partners and controlling the managers of SGX-listed Keppel REIT, Keppel DC REIT and Keppel Pacific Oak US REIT.
The new fund management platform will focus on raising capital and forging ties with investors, while the investment platform will drive capital deployment, Keppel said. The operating platform will consolidate the group’s existing business units, which include Keppel Infrastructure Holdings and Keppel Data Centres, with horizontal teams evaluating opportunities in targeted asset classes.
The asset monetisation programme will include unlocking value from Keppel’s sizeable land bank, with the proceeds reinvested in new growth engines and used to reward shareholders, according to Keppel.
Keppel Corporation got its start as a shipyard operator in 1968 and expanded into offshore energy in the 1970s, real estate in the 1980s, infrastructure in the 1990s and finance in the 2000s. As part of what it calls Vision 2030, the group is seeking to simplify and focus its portfolio, including with the divestment of its Keppel Logistics and Keppel Offshore & Marine businesses in the past year.
“Our business model allows us to earn different streams of recurring fee income, which will enhance the resilience of our earnings,” Loh said. “With our access to capital, coupled with faster capital recycling, we will be able to scale up and drive the group’s growth without relying just on our balance sheet, allowing us to expedite the achievement of our 15 percent ROE target. Together with the changes in how we organise ourselves, we believe that the investment community will relook at how Keppel is valued.”
The reorganisation is to be implemented over the next 12-18 months. Keppel’s simpler structure is expected to translate to annual savings of S$60 million-S$70 million by 2026.
Finance Hub Goals
Singapore’s ambition to become a regional finance hub has stirred its giant state-backed companies to action, including CapitaLand’s American-style evolution from a property developer with an investment management arm to an investment manager with a legacy development component.
In August 2021, CapitaLand shareholders overwhelmingly approved the $15.9 billion plan to privatise the Singapore property giant’s development operation and spin off its fund management business.
CapitaLand’s $65.5 billion in Asia Pacific real estate AUM was second only to Singapore-based GLP’s $80.5 billion in the ANREV Fund Manager Survey for 2022.