Four other unfinished units could later generate a further $988 million in cash
Singapore’s Keppel has established a new private fund into which it will divest 10 legacy drilling rigs, with Apollo Global Management set to invest US$1.5 billion in the fund.
Keppel’s indirect subsidiary RigCo this year will divest six operational rigs to Keppel Offshore Fund (KOF) for a total consideration of approximately S$1.2 billion (US$928 million) and is expected to receive a cash consideration of about US$478 million.
Keppel intends to progressively complete and potentially divest a further four rigs, which are in various stages of completion, to KOF from 2027 to 2028, subject to certain conditions being fulfilled.
Construction completion of this quartet of drilling units will be funded using existing cash retained in RigCo.
This four-rig deal, in aggregate, could generate approximately US$988 million in cash proceeds for Keppel.
Loh Chin Hua, Keppel chief executive, noted the transaction “establishes a clear pathway for the progressive monetisation of the legacy rigs”.
As manager of the newly established KOF, the Singapore company will earn recurring management fees, certain advisory fees and a share of distributions from its retained stake in the fund.
“Through our stake in KOF, we will remain invested alongside our limited partner, Apollo, in a high-quality modern rig fleet, positioning us to benefit from the improving long-term outlook and tight supply in the rig market,” said Loh.
Keppel noted the transaction comes against a backdrop of strengthening offshore rig market fundamentals, supported by high utilisation rates and structural supply constraints.
Following a decade of almost no newbuild activity, the global drilling fleet is ageing rapidly while the significantly higher cost, longer construction lead times and more stringent financing requirements for newbuildings, are expected to constrain future supply, it said.
“These dynamics are expected to support sustained demand for high-quality modern offshore rigs, thus creating attractive opportunities for owners of such assets,” Keppel added.
The Singapore-listed company confirmed the final three of its 13 legacy rigs are not part of this deal, and it will be “exploring various options for their monetisation”.
Keppel will recognise an accounting loss of approximately S$92 million from the six operational rigs being divested to KOF in its first-half 2026 results, which are to be announced on 30 July.
“As one of the first transactions of its kind in Southeast Asia, this partnership with Keppel demonstrates growing global demand among leading companies for high-grade capital solutions that advance strategic objectives,” commented Jamshid Ehsani, partner at global alternative asset manager Apollo.
Entities of SMBC Group are acting as debt advisor and placement agent to Apollo Funds. Latham & Watkins is serving as legal counsel for Apollo Funds and Milbank LLP is serving as investor’s counsel on the transaction.
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