On July 27, Singaporean marine and offshore company Keppel officially announced a programme to progressively monetise up to 10 legacy rigs through a new private fund, Keppel Offshore Fund (KOF), which is managed by Keppel. An indirect subsidiary of Keppel as well as funds, accounts and entities managed by Apollo (NYSE: APO) have agreed to subscribe for limited partnership interests in KOF.
Six operational rigs: Through its indirect subsidiary, Rigco Holding Pte. Ltd. (RigCo), Keppel will divest six operational rigs in 2026 to KOF for a total of approximately S$1.2 billion and is expected to receive a cash consideration of about US$478 million (approximately S$611 million)iv in 2026. KOF’s acquisition of the six rigs will be by cash from Apollo, while Keppel will make 50% of the contributions to the Fund to acquire six operational rigs, which will be satisfied by way of contribution in kind, subject to certain conditions being met.
Four additional rigs: In addition, Keppel intends to progressively complete and may divest the additional four rigs, which are in various stages of completion, to KOF from 2027 to 2028, subject to certain conditions being metv. This could generate, in aggregate, approximately US$988 million (approximately S$1.3 billion)i in cash proceeds for Keppelvi. The construction of the four legacy rigs would be funded using existing cash retained in RigCo.
The transaction will advance Keppel’s monetisation of its non-core assets, improve its gearing, unlock capital for re-investment and reward shareholders.
The divestment of the six operational rigs will contribute approximately S$1.2 billion towards Keppel’s announced asset monetisation for 2026, while increasing the Company’s Funds under Managementiii (FUM) by approximately S$3.9 billioni,ii. Subject to closing conditions, Keppel will earn, among others, certain advisory fees and recurring management fees as the investment manager of the fund, as well as a share of distributions from its stake in KOF.
Mr Loh Chin Hua, CEO of Keppel said, “This transaction marks a further milestone in Keppel’s transformation. It establishes a clear pathway for the progressive monetisation of the legacy rigs. By repositioning the six operational rigs and potentially another four rigs, within Keppel’s fund management platform, we are expanding our FUM and will earn recurring management fees. At the same time, 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.”
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 newbuild rigs, are expected to constrain future supply. These dynamics are expected to support sustained demand for high-quality modern offshore rigs, thus creating attractive opportunities for owners of such assets.
Keppel will recognise an accounting loss, including the recycling of foreign currency translation loss to profit or loss, of approximately S$92 million from the six operational rigs being divested to KOF in its 1H 2026 results, which will be announced on 30 July 2026.
Completion of the transaction is subject to various conditions precedent including the consent (where required) of relevant parties and the receipt of applicable regulatory approvals.
The final three of the 13 legacy rigs are not part of this transaction and Keppel will be exploring various options for their monetisation.