Keppel establishes a fund for the modernization of drilling rigs
Singapore's Keppel has established a private fund to transfer 10 outdated drilling rigs, into which Apollo Global Management is investing $1.5 billion. The deal reflects growing demand for modern offshore drilling platforms and could bring Keppel up to $988 million.
Petrus
Singapore-based Keppel has established a new private fund to which it plans to transfer 10 outdated drilling rigs. Apollo Global Management will invest $1.5 billion in this fund.
In 2024, Keppel’s subsidiary RigCo will transfer six operational drilling rigs to the Keppel Offshore Fund (KOF) at a value of approximately 1.2 billion Singapore dollars (US$928 million). Keppel is expected to receive a cash payment of around US$478 million from this transaction.
Keppel also intends to complete the construction of, and, subject to certain conditions, transfer four additional drilling rigs at various stages of completion to KOF between 2027 and 2028. The completion of these rigs will be financed by RigCo. The entire deal could bring Keppel about US$988 million.
As the management company of the new KOF fund, Keppel will receive regular management fees, certain advisory fees, and a share of the profits from its stake in the fund.
The company noted that the deal comes amid strengthening fundamentals in the offshore drilling rig market, supported by high utilization rates and structural supply constraints. After nearly a decade with few new orders, the global drilling rig fleet is rapidly aging, and higher costs, longer construction times, and stricter financing requirements for new rigs are expected to limit future supply growth.
Keppel expects these trends to sustain strong demand for modern, high-quality offshore drilling rigs, creating attractive opportunities for owners of such assets.
The company also reported that three of its 13 outdated drilling rigs are not included in this deal, and various options for their monetization are being considered.
Keppel will record an accounting loss of approximately 92 million Singapore dollars from the transfer of the six operational rigs to KOF, which will be reflected in its financial results for the first half of 2026.
As part of the transaction, SMBC Group entities are acting as debt advisors and placement agents for Apollo Funds. Latham & Watkins is providing legal counsel to Apollo Funds, while Milbank LLP is advising the investor on the deal. Clifford Chance is serving as Keppel’s legal advisor.