Keppel Infrastructure Trust · SGX:A7RU
Keppel Infrastructure Trust — Investor Presentation (April 2023)
56 slides from Keppel Infrastructure Trust's investor presentation, Apr 3, 2023
Slide 1: SIAS Dialogue Session
SIAS Dialogue Session 3 April 2023
Slide 2: Important Notice
Important Notice NOT FOR DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, EUROPEAN ECONOMIC AREA, CANADA, JAPAN, MALAYSIA, THAILAND OR AUSTRALIA The information contained in this presentation is for information purposes only and does not constitute or form part of, a
Slide 3: Outline
Outline Overview 4 2H and FY 2022 Results 9 Growth Strategy 18 Commitment to Sustainability 22 Appendix 21 Constituent of: Awards and Accreditations1: MSCI Singapore FTSE ST Large Small Cap Index & Mid-Cap Index 1. Keppel Infrastructure Fund Management Pte Ltd is a signatory to the United Nations-su
Slide 4: Overview
Overview Borkum Riffgrund 2, Germany
Slide 5: Largest SGX-listed Diversified Infrastructure Business Trust
Largest SGX-listed Diversified Infrastructure Business Trust Providing exposure to the resilient and growing global infrastructure sector S$7.3b AUM 12 evergreen businesses >10 mature economies Portfolio of scale providing global and concession assets Focused on investment grade jurisdictions access
Slide 6: Driving Portfolio Growth through New Acquisitions
Driving Portfolio Growth through New Acquisitions Expanding presence to AA and AAA-rated countries in Asia and Europe 2019 2021 2022: AUM of S$7.3b for FY20221 Sep 2022 Oct 2022 Dec 2022 Jun 2022 Jun 2022 Acquired a 52% Acquired a 20.5% Jun 2022 interest in BKR2, interest in Eco Acquired a 13.4% Man
Slide 7: Growing the Energy Transition and Environmental Service sectors
Growing the Energy Transition and Environmental Service sectors Completed three transformative acquisitions in 2H 2022 that support long-term DIPU growth European Onshore Wind Platform1 BKR2 – German Offshore Wind Farm1 EMKH – Integrated Waste Platform1 ▪ 3 operating wind farms in Norway and ▪ 465MW
Slide 8: Rationale for the Acquisitions
Rationale for the Acquisitions ▪ Strong sectoral megatrends underpin portfolio Account for 16% of KIT’s 1 Transformative acquisitions that align with KIT’s growth strategy ▪ Well-balanced mix of infrastructure businesses and assets in developed markets with best-in-class partners FY2022 AUM of S$7.3
Slide 9: 2H and FY 2022 Results
2H and FY 2022 Results Philippine Coastal
Slide 10: FY 2022 Highlights
FY 2022 Highlights Strong performance supported by portfolio growth and transformation Distributable income (DI) Total Assets Benefit from inflation +32% +15.8% $222.5m $6.0b >90% Supported by higher contributions from Enlarged footprint with investments in ~65% of portfolio with costs pass through
Slide 11: Energy Transition
Energy Transition Ene Distributable Income (S$m) ▪ European renewable energy investments rgy 115.7 4.9 0.9 ̶ European Onshore Wind Platform and BKR2 continue to benefit from higher electricity prices 74.3 55.5% Tran 26.5 ̶ Continue to monitor the energy regulatory policies in Europe 30.5 sitio 40.3
Slide 12: Environmental Services
Environmental Services Distributable Income (S$m) ▪ Eco Management Korea Holdings (EMKH) 70.3 ̶ Re-appointed CEO; business integration in progress 71.3 (1.5)% ̶ Maintained full utilization of incineration business; oil refining and landfill business remained healthy 72.3 ▪ Singapore waste and water
Slide 13: Distribution & Storage
Distribution & Storage Distributable Income (S$m) ▪ Ixom ̶ Completed three bolt-on acquisitions in FY 2022: Bituminous 9.5% 102.6 Products, Aromatic Ingredients and Pure Ingredients 93.7 ̶ Robust performance with healthy demand across sectors 85.7 95.7 ̶ Strategic review in progress, on track for co
Slide 14: Inaugural Portfolio Valuation
Inaugural Portfolio Valuation AUM of $7.3b for FY 2022 By Business and Assets ▪ Improve portfolio transparency and better reflect asset values Others, 1% Energy Transition, 60% ▪ Conducted by independent third-party valuer, Ernst & Young1 S$7.3b ▪ Reflects enlarged portfolio AUM of $7.3b Distributio
Slide 15: Distributable Income
Distributable Income Stronger performance supported by portfolio growth S$’000 2H 2022 2H 2021 +/(-) % FY 2022 FY 2021 +/(-) % Energy Transition 78,916 31,285 >100.0 115,667 74,376 55.5 - City Energy 26,506 10,805 >100.0 40,274 30,528 31.9 - Aramco Gas Pipelines Company 26,533 - NM 26,533 - NM - KMC
Slide 16: Balance Sheet
Balance Sheet Building a strong balance sheet to support growth plans ▪ Comfortable debt headroom for growth: Approx. $300m to 45% net gearing level ▪ Undrawn committed credit facilities: $184m ▪ Mitigating impact of currency fluctuations: 70.5% foreign distributions hedged ▪ Weighted average term t
Slide 17: Capital Management
Capital Management Well-diversified debt maturity profile ▪ Utilised $580m of equity bridge loans (EBL) in 2022 to partially fund the acquisition of EMKH and investment in BKR2: To tap the debt and equity markets for repayment within the year ▪ Approx. 72% of floating interest rates hedged1 as at 31
Slide 18: Growth Strategy
Growth Strategy European Onshore Wind Platform
Slide 19: Maintain Focus on Growth and Strengthen Execution
Maintain Focus on Growth and Strengthen Execution Pathway underpinned by both organic and inorganic growth Pursue Scale Up through Leverage the Organic Growth Inorganic Growth OneKeppel Network Strengthen and grow cashflow profile of Focus on evergreen, yield accretive assets and existing portfolio
Slide 20: Maintain Focus on Growth and Strengthen Execution
Maintain Focus on Growth and Strengthen Execution Track record of transformative acquisitions paving the way for further near-term initiatives Driving Organic Growth Pursuing Inorganic Growth ✓ Continue to expand Electric Vehicle (EV) ▪ Actively pursue third party evergreen businesses and Energy yie
Slide 21: Leveraging OneKeppel Ecosystem for Sustainable Growth
Leveraging OneKeppel Ecosystem for Sustainable Growth Drawing on Keppel’s strong development capabilities and operational track record Key Milestones for FY2022 Looking Ahead Beneficiary from OneKeppel Ecosystem Increased Collaboration Tap Keppel’s network to drive origination, 1 3 execution and por
Slide 22: Commitment to Sustainability
Commitment to Sustainability European Onshore Wind Platform
Slide 23: Advancing Sustainability, Driving Performance
Advancing Sustainability, Driving Performance Committed to achieving operational excellence that is led by our environmental, social and governance strategy and sustainability initiatives 2 WTE plants with a Capable of processing up combined capacity to treat to 19% of desalinated approx. 40% of Sin
Slide 24: Sustainability at the Core
Sustainability at the Core On track to achieve ESG targets Expanded portfolio in the Energy Transition and Environmental Services segments ▪ Progressing with decarbonisation roadmap: carbon emission intensity reduced by 21% YoY to approx. 8,600 tCO2e/$m, an approx. 20% drop from 2019’s level ▪ Incre
Slide 25: Thank You
Thank You www.kepinfratrust.com Connect with us on:
Slide 26: Additional Information
KEPPEL INFRASTRUCTURE TRUST Additional Information
Slide 27: Key Investment Highlights
Key Investment Highlights EMKH, South Korea
Slide 28: Transformative acquisitions that align with KIT’s growth strategy
1 Transformative acquisitions that align with KIT’s growth strategy Strong sectoral megatrends underpin portfolio Transformative acquisitions Exposure to the global green infrastructure sector with growth potential ▪ Strategic entry into the European renewable energy sector with investments in windf
Slide 29: Growing KIT’s exposure to green infrastructure segments
2 Growing KIT’s exposure to green infrastructure segments Benefiting from secular tailwinds of a circular economy and global decarbonization roadmap Generational megatrends Net-Zero Global Waste Carbon Taxes Higher demand for renewables and With population growth and A significant number of countrie
Slide 30: Strengthened cash flow resilience
3 Strengthened cash flow resilience Completed acquisitions of attractive wind assets in mature renewable energy markets across Europe Fäbodliden Högaliden Exposure to attractive power price outlook in Europe Sweden 79.2 MW 107.5 MW Cash flow visibility with attractive FiT regime and floor price till
Slide 31: Strengthened cash flow resilience
3 Strengthened cash flow resilience Addition of a high-quality waste management platform of scale in South Korea Strong operational Best-in-class operations EMKH’s businesses are strategically located in track record key industrial regions Korea Environment Development 95% >340 operating days/ annum
Slide 32: Strengthened cash flow resilience
3 Strengthened cash flow resilience Completed expansion into attractive sectors and markets in Europe and South Korea during 2H 2022 Diversification by Asset (%) Diversification by Geography (%) For FY2022 For FY2022 Environmental Distribution & Services, 10% EMKH, 6% Storage, 29% European Onshore 2
Slide 33: Accretive acquisitions
4 Accretive acquisitions Acquisitions deliver new long-term income streams, supporting sustainable DIPU growth Pro-forma FFO1 Pro-forma DIPU1 Pro-forma net gearing1 (S$m) (S$ cents per unit) (%) 314.5 4.60 39.8 4.46 4.45 0.15 35.2 82.6 (0.01) (9.3) 232.3 231.9 30.5 4.7 (0.4) FY2022 Adjustment Adjust
Slide 34: Reinforces KIT’s commitment to ESG targets
5 Reinforces KIT’s commitment to ESG targets Driving long-term value creation through sustainable investments; supporting global climate agenda Increase exposure of renewable Contribute to the circular Reduce emissions intensity2 energy to 10% of KIT’s FY2022 AUM1 economy Increase exposure of renewa
Slide 35: European Onshore Wind Platform Overview
European Onshore Wind Platform Overview
Slide 36: KIT’s maiden renewable energy investment
KIT’s maiden renewable energy investment Sponsored by FORAS and investing alongside leading European asset managers ▪ Jointly invested with KLP and MEAG to acquire a 49% stake in a diversified portfolio of three operating onshore wind energy assets in Norway and Sweden (Initial Portfolio) from FORAS
Slide 37: Attractive Risk Profile
Attractive portfolio of windfarm assets across the Nordics and UK 258MW of operating projects + 1.2GW of pipeline potential1 Högaliden Initial portfolio 5-year exclusive right to Fäbodliden FORAS’ eligible pipeline 107.5 MW Projects with combined NO4 COD 2021 No development or 79.2 MW capacity of 25
Slide 38: FORAS – a strong and reputable operating partner
FORAS – a strong and reputable operating partner with a visible and extensive pipeline available to the Fundco investors ▪ Asset developer and owner with a long-term cradle to grave mindset; projects designed with long term ownership in mind to minimize lifetime total costs ▪ Excellent track record
Slide 39: Beachhead platform in a mature renewable energy market
Beachhead platform in a mature renewable energy market Supported by strong sector tailwinds, in line with KIT’s growth strategy Nordics Electricity Demand (TWh) ▪ Nordics and the UK are among the most mature renewables markets globally 562 ▪ Positive outlook for wind and other renewable energy sourc
Slide 40: German Offshore Wind Farm Overview
German Offshore Wind Farm Overview
Slide 41: Deepen exposure in renewables with first offshore wind investment
Deepen exposure in renewables with first offshore wind investment KIT’s second investment in renewables, reinforcing strategy to grow the Energy Transition segment ▪ Jointly invested with Keppel Corporation to acquire a 25%1 stake in Borkum Riffgrund 2 (BKR2), a 465MW operating German offshore wind
Slide 42: Well-located windfarm backed by an attractive FiT regime
Well-located windfarm backed by an attractive FiT1 regime Strong and consistent wind strength and resource availability in the North Sea ▪ High wind resource availability in the North Sea: high capacity factor of >40%2 with low variability of <10% between P90 and P503 ▪ Located next to Wadden Sea wh
Slide 43: Ørsted a strong operating partner with proven track record
Ørsted a strong operating partner with proven track record Partnering with a highly regarded developer and operator in the offshore wind sector ▪ Ørsted is a leading player in offshore wind power industry globally with over 30 years of experience ▪ Asset to benefit from operational efficiencies, giv
Slide 44: FiT regime and guaranteed price floor provide cash flow visibility
FiT regime and guaranteed price floor provide cash flow visibility Stable power price outlook in the long term with projected capture price above price floor ▪ BKR2 operates under the German EEG 2014 market premium mechanism with attractive FiT and guaranteed floor price till 2038 ▪ Legislation proh
Slide 45: Favourable tailwinds supporting positive renewable energy outlook
Favourable tailwinds supporting positive renewable energy outlook Driven by decarbonisation and the German government’s push to increase offshore wind capacity Demand drivers Supply drivers ▪ Electricity demand to grow by 2.3% CAGR from ▪ Strong regulatory support to increase 2022 to 2050, supported
Slide 46: EMKH Overview
y KEPPEL < INFRASTRUCTURE X TRUST EMKH Overview
Slide 47: Acquisition of a leading waste platform in South Korea
Acquisition of a leading waste platform in South Korea Acquisition marks KIT’s expansion into South Korea ▪ Jointly invested with Keppel entities to acquire Eco Management Korea (EMKH), with KIT holding 52% 52% Investor Holdco majority interest ▪ EMKH is a leading integrated waste management player
Slide 48: EMKH: South Korea’s leading integrated waste platform
EMKH: South Korea’s leading integrated waste platform Defensive business backed by blue chip customers Solid Liquid Landfill 3rd largest Largest 4th largest incineration capacity in South waste oil refining player in South landfill capacity in South Korea, Korea (419 tons/day) Korea (154 tons/day) a
Slide 49: Strategic expansion into a market supported by strong tailwinds
Strategic expansion into a market supported by strong tailwinds Supported by continued waste production and limited growth in incineration and landfill capacity Waste Production in South Korea (k tons / day)1 Waste Treatment Capacity (k tons / day) ▲2.5% CAGR ▲4.9% CAGR 647 614 630 647 598 614 630 5
Slide 50: High barriers of entry favouring incumbent players with scale
High barriers of entry favouring incumbent players with scale Sustainable competitive advantage creates favourable macro environment for existing players 1 Increasingly stringent environmental policies/regulations ✓ Strong operational expertise ✓ Strong funding capability 2 Challenges in obtaining b
Slide 51: Leveraging proprietary expertise across the Keppel Group
Leveraging proprietary expertise across the Keppel Group Draw on the Group’s development and operational track record to value add and grow EMKH Keppel Infrastructure Trust ▪ Over a decade of track record in managing Proven and patented WTE technologies WTE and water treatment facilities: owns used
Slide 52: Investment in Aramco Gas Pipelines Company
Investment in Aramco Gas Pipelines Company
Slide 53: Diversified portfolio with maiden investment in the Middle East
Diversified portfolio with maiden investment in the Middle East Completed the investment in Aramco Gas Pipelines Company ▪ Part of a global consortium to acquire a 49% stake in Aramco Gas Pipelines Company, which holds a 20-year lease-and-lease-back agreement over the usage rights of Aramco’s gas pi
Slide 54: Invest in a strong and growing business
Invest in a strong and growing business Supported by favourable gas demand dynamics ▪ Saudi Arabia as a stable and attractive investment destination Natural Gas Demand Projections by Sector KSA is world’s most improved economy in Doing Business1 (billion cubic meters)1 Top 10 Jumped 30 8 140 Global
Slide 55: Robust contractual framework with downside protection
Robust contractual framework with downside protection Enhances resiliency of KIT’s portfolio 1 Lease period of 20 years provides long- term cash flow visibility 5 2 Minimum Well-structured volume governance commitment framework from Aramco No CAPEX & OPEX 4 3 risks as Aramco Quarterly tariff retains
Slide 56: Thank You
Thank You www.kepinfratrust.com Connect with us on:
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