Keppel Land

Keppel Land: Share price surged to a 52-week high yesterday, with the Business Times alluding it to market chatter of a potential privatization by parent Keppel Corp. Some analysts have however been quick to dismiss the rumours, citing a lack of business synergy between Keppel Corp and Keppel Land. While Keppel Corp certainly has deep enough pocket to take its property arm private, doing so now will force it to take on debt at a time when both the offshore rig and property cycles are tipping into a downturn, while interest rates are heading higher. If this materializes, there are concerns that Keppel Corp may to trade at an even deeper conglomerate discount. Keppel Corp owns 54.6% of Keppel Land, and an acquisition of the remaining stake will cost ~$4.2b, assuming the deal is transacted at Keppel Land’s RNAV, or $2.6b based on market cap. Meanwhile, analysts are attributing the recent rise in Keppel Land’s share price to a possible special dividend, which could be announced in the group’s FY14 results release today. Keppel Land recently disclosed that it had made divestment gains of about $94.5m from the sale of its one-third stake in MBFC Tower 3, and a $65.9m gain from its 30% stake sale in two date centres to Keppel DC REIT. Elsewhere, the group booked a net gain of $59.5m from its divestment of Equity Plaza in Aug ’14, and is expected to receive net proceeds of $68.4m from the divestment of its 51% stake in Al Mada Towers in Saudi Arabia. Keppel Land and Keppel Corp are on trading halt this morning.