Keppel has also assigned 840,000 bonds issued by SRC to GWTT for VND910 billion ($49.3 million) (Picture: Keppel)
Keppel, through its real estate division, has divested its 42% stake in South Rach Chiec City (SRC) to Vietnamese real estate company Gateway Thu Thiem Joint Stock Company (GWTT). According to an April 1 release, the transaction has resulted in total cash proceeds of VND2.612 billion ($141.4 million).
South Rach Chiec City is the developer behind Palm City, a 30-hectare integrated township situated in District 2 of Ho Chi Minh City. The township saw the completion and handover of its first two residential phases, Palm Residence and Palm Heights, in 2017 and 2019, respectively. There are four remaining plots under development, including two residential plots, a mixed-use plot and a medical plot.
Keppel says the total proceeds include a cash consideration of VND1,702 billion ($92.1 million) for the 42% equity stake, taking into account the adjusted net asset value of Keppel’s stake as of March 4. Keppel has also assigned 840,000 bonds issued by SRC to GWTT for VND910 billion ($49.3 million), which is equivalent to the face value of the bonds and accumulated bond interests as of March 31.
Before the divestment, Keppel recognised cumulative profits after tax of around $24.6 million from the sale of residential units at Palm City, says the group. The divestment, completed in March, is expected to generate a net profit of approximately $55 million for Keppel.
The divestment of Palm City forms part of Keppel’s plan to monetise a cumulative $10 billion to $12 billion of assets by the end of 2026, says Louis Lim, CEO of real estate at Keppel.
“This move demonstrates Keppel’s continued execution of our asset-light strategy despite the challenging market,” he adds. "Since embarking on our asset monetisation programme in October 2020, we have announced the unlocking of about $7.1 billion in assets from our balance sheet, excluding businesses such as offshore and marine.”
The divestment is not expected to have any significant impact on Keppel's earnings per share or net tangible assets per share for the current financial year.