K-Green Trust

K-Green Trust (KGT) is a business trust set up by the sponsor, Keppel Integrated Engineering Limited (KIE) which is a wholly-owned subsidiary of Keppel Corporation Limited (KCL).

 

KGT will be listed and traded on the Singapore Exchange (SGX) on 29 June 2010. Its investment objective is to invest in “green” infrastructure assets (such as waste management, water and wastewater treatment, renewal energy, energy efficiency and other “green” initiatives) in Singapore and globally with a focus on Asia, Europe and the Middle East.

 

The trust will have in its portfolio the following plants on listing the trust on SGX:

1. Senoko Plant – waste incineration plant

2. Tuas DBOO Plant – waste incineration plant

3. Ulu Pandan Plant – NEWater plant

All three plants are in operation and have between 15 years to 25 years operational agreements with Singapore statutory bodies.

 

Financial Numbers

 

As at listing date, 29 June 2010, which is half way into the financial year 2010, the Net Assets per unit of KGT is $1.12.

 

The projected net profit for

– 6 months to end December 2010 is $7.1m

– full year to end December 2011 is $13.6m

 

The proposed annualised distribution yield to unitholders based on implied issue price of $1.13 for

 – 6 months to end December 2010 is 6.82%

– full year to end December 2011 is 6.95%

 

Keppel Corporation’s shareholders

 

Shareholders of KCL up to books closure date of 22 June, are entitled to receive 1 KGT unit for every 5 shares held free, in the form of dividend in specie.

 

e.g. if you own 1,000 shares of Keppel Corporation as at 22 June, you will automatically receive 200 units of KGT without any further payment.

This amount of dividend in specie works out to be $0.23 per share (at implied value of unit at $1.13 for KGT) This will mean that Keppel Corporation share price technically will be reduced by $0.23 after ex-dividend date, i.e 22 June. However in the process, you own 200 units of KGT which will be traded on SGX for the 1000 shares of Keppel Corporation held by you.

 

Keppel Corporation, through the sponsor KIE, will continue to own 49% of KGT. Temasek Holdings will own 10.6%. The public and institutional investors will own 40.4% of KGT.

 

Odd-lot trading period

 

For unitholders who wanted to increase holdings of KGT to round to thousand units of KGT(board lot) or sell their odd-lots, the window is one month ending on 28 July 2010.

 

Comments

 

“Green” initiatives companies will be the next big thing for fast developing world where waste management and sustainable resources production and usage have to be managed well.

 

The risks involved in investment in KGT are there. There will always be operational risks such as significant plant down-time, and other risks dealing with counter-parties and major customers. Investors should read these in the Introductory Document of K-Green Trust.

 

Copyright © 2010, the author known as LKT in Singapore.

 

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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