Should Keppel ditch its stakes in M1?

Selling would result in a $196m payday.

As Keppel Corp's traditional cash-generating O&M business is facing headwinds, the group may not need to divest soon. But with the imminent threat looming for its stake in M1, it better ditch its shares fast.

According to a report by Maybank Kim Eng, M1 is the most likely divestment choice should Keppel face cash crunch.

"We view M1 as non-core to Keppel as it is not synergistic with its key businesses and given its inability to exercise significant control due to its effective 15% stake," the report stated.

At the estimate, divesting its stake in M1 could free up to $342 million of cash at the current market price.

"If Keppel shares this view, it may be a reason to divest, and it would still realise a gain of around $196 million," the report said.

Potential buyers of Keppel's shares in M1 would naturally be current major stakeholders such as Axiata, which reportedly plans to consider raising its stake in M1 if the price is right.