Singapore’s Keppel brings Apollo into legacy rig portfolio in USD 2.9bn monetisation plan

Singaporean diversified group Keppel Ltd. has agreed to move six operational offshore drilling rigs into a newly created private fund backed by Apollo Global Management, giving the Singapore group a cleaner way to dispose of legacy assets without walking away from the offshore market altogether.

The six rigs will be transferred by Keppel’s Rigco Holding to the Keppel Offshore Fund for about or SGD 1.22bn (USD 957mn). Apollo-managed funds will provide the cash portion of the acquisition, while Keppel will contribute its share of the fund in kind and remain invested alongside Apollo. Keppel expects to receive about USD 478mn in cash from this first phase.

The structure is central to the deal. Keppel is not simply selling the rigs and moving on. It will continue to manage the fund, earn recurring management and advisory fees, and retain exposure to any future upside from the assets. The transaction is expected to add about SGD 3.9bn (USD 2.9bn) to Keppel’s funds under management, reinforcing the group’s shift toward a more asset-light, fee-based model.

There may be more to come. Keppel plans to complete four additional rigs that are still under construction and could transfer them to the fund between 2027 and 2028, subject to pricing and other conditions. Those later disposals could generate another USD 988mn in cash proceeds. Altogether, the programme could monetise up to 10 legacy rigs.

The deal fits into Keppel’s broader effort to put its offshore past behind it. Since combining its former offshore and marine business with Sembcorp Marine, now Seatrium, the company has been steadily working through assets left outside that transaction. The fund structure allows it to free up capital, reduce balance-sheet exposure and potentially use proceeds for debt reduction, new investments or shareholder returns.

The market backdrop also helps. Offshore rig utilisation has improved, while years of limited newbuild activity have left the industry with a tighter supply of modern units. Older fleets, higher construction costs and longer lead times have all made existing rigs more valuable.

Apollo, which has committed USD 1.5bn to the fund, is effectively buying into that recovery. The investment gives the firm access to a portfolio of operating offshore assets at a time when demand is strengthening and replacement supply remains constrained.

Keppel will take an accounting loss of about USD 71mn on the initial six-rig transfer, but the strategic logic is clearer than the headline loss suggests. The company is turning a difficult legacy portfolio into a source of cash, fee income and third-party capital, and doing so without fully giving up the upside if the rig market continues to improve.

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