Singapore-listed conglomerate Keppel Corporation Limited (Keppel) has agreed to acquire a 50 per cent stake in Pierfront Capital Fund Management, an independent investment company offering junior debt, mezzanine, and structured financing solutions.
In a disclosure, Keppel said its wholly-owned subsidiary, KC Management One Pte Ltd, has signed a conditional share and purchase agreement with Pierfront Capital to acquire the shares from Pierfront Capital Mezzanine Fund (PCMF) for a total of $7.8 million.
Pierfront Capital is a wholly-owned subsidiary of PCMF, a Singapore-based alternative credit investment company in which Temasek Holdings and Sumitomo Mitsui Banking Corporation hold approximately 90.91 per cent and 9.09 per cent stakes, respectively.
Under the terms of the shareholders agreement to be entered into between KC Management One, PCMF, and Pierfront Capital, the core business of Pierfront Capital will be to act as the investment manager of Keppel-Pierfront Private Credit Funds, a series of funds that will deploy credit investment strategies in the real asset sectors.
The strategic acquisition of a stake in Pierfront Capital allows Keppel Capital to manage mezzanine loans for private debt, while extending its fund management capabilities beyond the equity layer of the capital stack, said Christina Tan, CEO of Keppel Capital, the asset management arm of Keppel Corporation.
Private mezzanine debt for real estate and infrastructure projects is a growing asset class, Tan added. She expressed confidence that the Keppel-Pierfront Private Credit Funds will be well-positioned to capture investment opportunities and create value for investors and the Keppel Group.
Keppel said the aggregate cash consideration for the shares was arrived at on a willing buyer, willing seller basis, taking into account establishment costs, projected working capital requirements, and potential synergies between the two firms involved.
The acquisition will be financed through internal working capital, Keppel added.
As of September 30, 2019, the book value and net tangible assets value of the shares was $175,000 based on the unaudited management accounts of Pierfront Capital.
Pierfront Capital was established in 2015 with a focus on growth capital for asset and corporate acquisition, refinancing, and project expansion.