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2024 marked our first year as the New Keppel, a global asset manager and operator.
At the Global Keppelites Forum (GKF), our annual townhall in February 2024, I had challenged Keppelites to be ambitious, to scale and to accelerate our transformation. Despite facing some difficult moments, you have prevailed and risen to the occasion. We have indeed made considerable progress in our ongoing transformation from a diverse industrial conglomerate into one horizontally integrated business; from a balance sheet player to an asset manager funding growth with Funds Under Management (FUM); and from lumpy trading and order book profits to recurring income.
Our FUM has grown to S$85 billion by mid-2024, up from S$55 billion at the end of 2023, arising from both the strategic acquisition of an initial 50% stake in Aermont Capital as well as organic fundraising. We are on track to achieve our interim FUM target of S$100 billion by end-2026, and possibly even earlier.
We also continued our asset monetisation programme, announcing about S$1.5 billion of asset monetisation in 2024, considerably higher than the S$950 million in 2023, despite the challenging market.
We have also reaped substantial synergies as one integrated company from amalgamating and optimising the Company’s centralised functions, as well as digitalising our operations. Since we embarked on our transformation programme at the start of 2023, we have achieved our target of S$70 million in recurring annual run-rate cost savings, two years ahead of schedule.
Moving forward, machine learning and Artificial Intelligence (AI) will play significant roles in our efforts to enhance efficiencies, generate actionable insights, and improve investment processes and operations. To help accelerate our growth, we are developing the Keppel AI Platform, affectionately called KAI, to promote digital adoption of cloud and AI solutions across our operations and private funds.
I have often said that we are in the right space, at the right time. Keppel is well poised to address some of the world’s most challenging problems.
First, climate change and the energy transition. With the impact of climate change becoming increasingly apparent, climate action is a priority for governments, organisations and communities around the world. We are well-positioned to provide solutions through our Infrastructure Division, which is investing in and creating solutions and services across renewables, clean energy and decarbonisation. Our Real Estate Division is also contributing to decarbonising the built environment through our Sustainable Urban Renewal initiatives. Despite the changing political landscape, we believe climate action remains a key imperative. We will continue to develop decarbonisation solutions that enable our customers to reach their net zero targets.
Second, even though the international geopolitical landscape is increasingly polarised, demand for digital connectivity infrastructure such as data centres and subsea cables continues to grow. Large investments will be required to support the exponential growth in AI, machine learning and Generative AI. Today, we have a premier portfolio of 35 data centres across key data hubs in Asia Pacific and Europe, with a total gross power capacity of 650 MW. We aim to expand our portfolio by over 500 MW to 1.2 GW in total in the near-term, fuelled by an additional S$10 billion FUM growth in our data centre funds.
Significantly, in December 2024, Keppel signed a groundbreaking Strategic Framework Agreement with Amazon Web Services (AWS). This Agreement is the first of its kind that AWS has signed with a solutions provider at a global level that spans data centres, subsea cables, and renewable energy. It is a strong testament that cloud players see Keppel as more than just a data centre provider but an ecosystem player - one with the ability to provide power, off-grid solutions, green energy, cooling, and subsea cable connectivity, in addition to data centres. It also opens doors for future partnerships with other global technology leaders to strengthen our ecosystem that aims to provide sustainable infrastructure solutions for AI, for both training and inference workloads, and eventually, quantum computing.
Third, amidst the volatile global economy, investors are increasingly turning towards alternative real assets, such as infrastructure, real estate and private debt. Such assets offer greater stability compared to traditional investments, providing a strong anchor to any investment portfolio, mitigating risks and generating good real returns against the backdrop of economic uncertainty and heightened inflation risks.
Given the significant investments needed for large scale and technologically-advanced infrastructure and connectivity solutions, Keppel’s asset-light model offers a significant strategic advantage, by enabling us to seize growth opportunities without being constrained by our balance sheet. Through leveraging external capital and maintaining a robust capital recycling system, Keppel can invest in and develop more projects to drive our expansion at speed and scale.
We are thus at a very exciting stage in Keppel’s growth journey.
Despite the many changes taking place across the Company, I am heartened that Keppelites are strongly aligned with and committed to achieving our goals. In the 2024 Employee Engagement Survey, we had a high engagement score of 84%, with 90% of staff indicating that they are proud to work for Keppel and support the Company’s transformation to be a global asset manager and operator.
We are honoured to be recognised for our successful business transformation at various platforms, such as the Singapore Business Awards 2023/2024. We are also focused on running our business sustainably, and are privileged to be included among the World’s Most Sustainable Companies 2024 by TIME Magazine, and in global sustainability indices such as the DJSI World and Asia Pacific and MSCI ESG Ratings. Reflecting our focus on gender diversity and appointing the best person for the job, Keppel was also named one of the World’s Top Companies for Women 2024 by Forbes.
Looking ahead to 2025, despite a more challenging environment with rising geopolitical contestations and conflicts, I expect Keppel to continue to perform well. This confidence is drawn from the tail winds that propel us forward – energy transition, digitalisation/AI, and growth in demand for alternative real assets, as well as from Keppelites united in pushing Keppel forward on this new trajectory. Keppelites, who embrace our core values of being Agile, Can Do and Trusted (ACT), will do well navigating and seizing opportunities in the more turbulent, and fast changing world ahead of us.
As I shared at GKF, Act Two is often more difficult after what has been a successful start to our transformation. Whilst there is still much more to do, I am confident we will get there. We will remain focused on accelerating our transformation and growth as a global asset manager and operator, and provide sustainability and connectivity solutions the world needs, while delivering strong returns for the investors in our funds, REITs and Trust, and for our shareholders.
I wish everyone a happy and healthy new year.
Yours sincerely,
