The $14.5 Billion Pivot: How a Legacy Giant is Quietly Powering the AI Gold Rush

Introduction: The Art of Corporate Reinvention

In the theater of institutional finance, the “pivot” is a term often reserved for nimble tech startups. For a multi-decade industrial conglomerate, such a transformation is usually compared to turning an aircraft carrier in a canal. Yet, Keppel Ltd. has defied the gravity of its legacy, successfully evolving from its offshore and marine (O&M) roots into a high-growth, asset-light global manager and operator. Today, Keppel represents a premier case study in strategic migration, positioning itself at the nexus of the energy transition and the digital infrastructure surge. By shedding capital-intensive legacy assets, the firm has emerged as a high-ROE powerhouse designed to capture the infrastructure requirements of the AI era.

The “New Keppel” Surge: 39% Growth and the Quality of Earnings

For institutional investors, the headline consolidated net profit of $789 million in FY2025 (down 16% year-on-year) requires a deeper look into the ledger. This figure was weighed down by a $222 million accounting loss associated with the strategic divestment of M1’s telco business—a “clean-up” cost essential to the pivot.

When isolated, the “New Keppel”—defined as the core business excluding non-core portfolios for divestment and discontinued operations—paints a far more aggressive growth picture. Net profit for the New Keppel soared 39% year-on-year to $1.1 billion. More critically, the “quality of earnings” has shifted; recurring income grew 21% to $941 million, providing the stable cash flow profile that institutional capital demands.

Management’s focus on efficiency is evident in the firm’s improved ratios:

• Return on Equity (ROE): The New Keppel’s ROE jumped to 18.7% from 14.9% in FY2024.
• Deleveraging: Net Debt to EBITDA improved to 2.0x, down from 2.3x a year prior.
• Operational Discipline: The firm achieved $98 million in annual run-rate cost savings, on track to meet its $120 million target by 2026.

As CEO Loh Chin Hua noted, “The market increasingly recognises Keppel as a global asset manager & operator and has continued re-rating the Company.”

Powerbanking: Securing the Digital Frontier

Keppel is moving beyond simply building data centers; it is “powerbanking”—securing early, exclusive access to the power, water, and fibre connectivity that have become the primary bottlenecks of the AI expansion.

The firm’s data center powerbank in Asia Pacific has expanded to over 1.0 GW. A standout in this portfolio is the “shovel-ready” 720 MW AI campus site near Melbourne, Australia. By securing these high-demand capacities early, Keppel significantly shortens the time-to-market for hyperscalers and neoclouds. Management projects that this 1.0 GW powerbank, when fully activated, could catalyze an additional +$10 billion in Data Centre Funds under Management (FUM).

Metric	2024 Status	2025/Future Milestone
Gross Power Capacity	650 MW	>800 MW
Powerbank Capacity	~300 MW	>1.0 GW (Current)
FUM Potential	Base FUM	+$10 Billion Potential Growth

The $14.5 Billion Exit Strategy

Keppel’s asset-light goal is supported by one of the most aggressive monetization programs in the sector. Since October 2020, the firm has announced $14.5 billion in divestments, with $2.9 billion announced in 2025 alone.

The $1.3 billion move to exit M1’s telco business is a definitive pivot away from pure-play telecom toward higher-margin technology solutions. Even within the legacy Real Estate segment, the shift is clear: Keppel recorded $98 million in “Real Estate-as-a-Service” revenue in FY2025, proving the asset-light model has penetrated every division. With $13.5 billion remaining in the Non-Core Portfolio to be monetized by 2030, Keppel has a massive reservoir of capital ready to be redeployed into growth-oriented infrastructure.

Bifrost: Commercial Validation of Global Connectivity

While data centers provide the processing power, Keppel’s Connectivity segment provides the transit. The Bifrost Cable System, the world’s first subsea link directly connecting Singapore to the US West Coast via Indonesia, commenced commercial traffic in December 2025.

Bifrost is not a speculative play; it is already seeing immediate commercial validation. Two fibre pairs were committed by the end of FY2025, and a binding term sheet for a third was signed in January 2026. For a strategic analyst, the long-term math is compelling: Bifrost is expected to generate an average of ~$200 million in O&M fees per fibre pair over its 25-year lifespan, creating a high-margin, recurring income engine that is decoupled from market volatility.

Institutional Magnetism: Managing $95 Billion in “Dry Powder”

Keppel’s Asset Management division has achieved a five-year FUM CAGR of 21%, reaching $95 billion by end-2025. The firm attracted $10.1 billion in new FUM in 2025 alone, driven by flagship vehicles like Data Centre Fund III and Education Asset Fund II.

The institutional appeal of this platform is demonstrated by its capital source: 81.3% of capital originates from Pension and Sovereign Wealth Funds globally. These LPs are increasingly seeking real assets as an inflation hedge, and Keppel’s $24 billion in “dry powder” ensures it can act quickly as opportunities arise. As CEO Loh Chin Hua emphasized, institutional investors prize managers who can not only originate deals but also operate complex, critical infrastructure.

The Shareholder Payday: A 58.5% Total Return

The success of this transformation is ultimately reflected in shareholder value. Keppel delivered a Total Shareholder Return (TSR) of 58.5% in 2025, dwarfing the STI’s 28.8%.

This return is underpinned by a disciplined capital distribution strategy:

• Ordinary Dividend: A total of $0.34 per share in cash.
• Special Dividend: To reward monetization progress, a special dividend of ~$0.13 per share was proposed (composed of $0.02 cash and a distribution in-specie of Keppel REIT units).
• Confidence Signal: The firm repurchased $116 million in shares under its $500 million Share Buyback Programme by year-end, signaling that management believes the stock remains undervalued relative to its new growth trajectory.

Conclusion: A Blueprint for the Next Century

Keppel has successfully navigated the “valuation gap” that plagues many legacy conglomerates. By focusing on recurring income—specifically within its Infrastructure division, which has seen a 51% CAGR in recurring earnings since 2021—Keppel has transformed into the engine room of the AI and sustainability waves.

As industrial giants worldwide struggle to remain relevant in a decarbonizing, digitalized economy, Keppel has provided more than just a recovery story. It has provided a blueprint: Has Keppel just defined the modern infrastructure model for the next century?

WATCH THE EXPLAINER VIDEO BELOW:

LISTEN TO THE PODCAST BELOW:

Related stories: Keppel Infrastructure Trust Trades Oil Storage For Subsea Cables In FY2025