- Temasek-backed asset manager eyes clean energy, data centers for new investment
According to Nikkei Asia article published on March 9, 2023, Singapore's Keppel Corporation is tapping emerging markets like Vietnam for growth, with the country gaining traction as a manufacturing hub for investors seeking to diversify from China.
The company's CEO Loh Chin Hua noted in an interview with Nikkei Asia that businesses have been leaning into a "China plus one" strategy -- a bid to diversify investments from the mainland in favor of alternative destinations to reduce concentration risks.
Diversification picked up when U.S.-China trade tensions rose under former U.S. President Donald Trump. This accelerated amid the COVID-19 pandemic, which saw China's harsh lockdown policies hampering industries and prompted investors to think twice about relying too much on the world's second-largest economy.
"There's a lot of activities, manufacturing, where a number of these multinationals -- especially tech companies -- have started into Vietnam, looking at Vietnam as a possible manufacturing base," Loh said. "We predict that we are in a very good position to ... invest even more into that country."
The company's Keppel Land unit last year announced that its subsidiary Keppel Land Vietnam Properties had struck a deal with Vietnam's Phu Long Real Estates Joint Stock Company and its An Khanh New City Development Joint Venture unit to acquire a 49% interest in three residential land plots.
Located in Hanoi, the land was acquired for 159.7 million Singapore dollars ($118 million). Keppel and its Vietnam partner plan to develop about 1,260 residences comprised of over 1,000 condominium units and more than 200 detached homes for about SG$680 million.
The project is part of Mailand Hanoi City, a project now in the works that features residential properties, mixed-use complexes, schools and hospitals. Keppel Land has the right of first offer for the project's latter phases.
"Beyond real estate, we also see a lot of opportunities in Vietnam in terms of the energy transition," Loh said. "We are also looking at possibilities of waste-to-energy business in Vietnam and of course data centers, in which the group is quite strong."
Keppel, which counts Singapore state investor Temasek as a major shareholder, has a data center business that develops and manages facilities across Indonesia, Malaysia, China and other markets.
The conglomerate is regarded by some as an anchor enterprise that has contributed to Singapore's rapid industrialization after it became a sovereign state in 1965, alongside other Temasek-backed companies such as Singapore Airlines and telecom Singtel.
Like its local peers, Keppel has weathered storms throughout its history. The company was among the world's largest offshore rig builders but faced headwinds due to the global shift from oil and gas to cleaner energy.
Keppel this year divested the offshore business to focus on other areas such as data centers and urban development. In 2022, it announced a deal to merge its rig unit with another Singapore rig builder, Sembcorp Marine.
Deal negotiations began when oil prices were slumping and both parties wanted to pivot to the clean-energy market. At the time they believed their combined capital and resources would place them in a better position to meet the needs of an industry attempting to wean itself off fossil fuels. The merger received shareholder approval in February.
Apart from challenges in the oil and gas sector, former senior management staff of Keppel's old rig unit were allegedly embroiled in a multimillion-dollar bribery case involving Brazilian oil giant Petrobras. The scandal involved staff allegedly taking part in a conspiracy to bribe officials of state-owned Petrobras in order secure projects in Brazil.
The suspect staff were eventually warned by Singapore authorities but were not prosecuted, raising questions as to why the law did not pursue them further given the city-state's strict policies on corruption.
In February, Minister in the Prime Minister's Office Indranee Rajah gave an account of the outcome in parliament, explaining that the attempts at investigating the case across borders did not lead to anything conclusive. "Simply put, there is a lack of sufficient evidence, either documentary or through witnesses, which would establish any criminal charge beyond a reasonable doubt against a specific individual," she said.
Having left the challenges of the rig business behind, Keppel is now focused on charting a new path as an asset manager by leaning away from one-off profits given by completed projects and into recurring income that it can draw from its portfolio such as services and rentals.
Apart from Vietnam, the company is eyeing other markets in the 10-member Association of Southeast Asian Nations for new assets.
"Countries like Indonesia, ThailandMalaysia similarly have also benefitted from rapid urbanization and they have also benefitted from rising affluence, a rising middle class," Loh said. "There are good opportunities for investments and for business, certainly in the ASEAN market."
