Apollo-managed funds and affiliates have agreed to invest $1.5 billion in the Keppel Offshore Fund, a new private vehicle that will initially acquire six operational offshore drilling rigs from Keppel.
The transaction gives Keppel a route to convert legacy rig assets into cash and fee-generating funds under management while retaining an economic interest in the portfolio. Apollo, meanwhile, gains exposure to offshore energy infrastructure through a transaction the companies describe as investment grade and among the first of its kind in Southeast Asia.
Key Overview
- Apollo-managed funds will commit $1.5 billion to the Keppel Offshore Fund.
- Keppel will sell six operational rigs to the fund for approximately S$1.2 billion in 2026.
- Keppel expects about $478 million in cash from the first phase.
- Four additional rigs may be transferred between 2027 and 2028, potentially generating another $988 million.
- The programme could add approximately S$3.9 billion to Keppel’s funds under management.
- Completion remains subject to closing conditions and applicable regulatory approvals.
Six-Rig Sale Unlocks Immediate Capital
Under the detailed monetisation programme, Keppel’s indirect subsidiary, Rigco Holding, will divest six operational rigs to the fund for about S$1.2 billion.
Apollo’s cash commitment will finance the fund’s acquisition, while Keppel will make 50% of the required contribution through an in-kind transfer rather than an additional cash payment. Keppel expects the partial drawdown of Apollo’s commitment to deliver approximately $478 million, or around S$611 million, in cash during 2026.
The six rigs are modern jack-up units identified as AD 110, AD 120 and ADM 683 through ADM 686. By placing them inside a managed fund, Keppel can continue earning advisory and recurring management fees while sharing in future distributions through its fund stake.
Four More Rigs Could Extend the Programme
Keppel also plans to complete four rigs that remain under construction and may progressively sell them to the fund between 2027 and 2028. Those assets include a harsh-environment jack-up, a drillship and two harsh-environment semisubmersibles.
Subject to agreed valuations and other conditions, this second phase could generate roughly $988 million, or S$1.3 billion, in additional cash proceeds. Combined, the planned transfers form part of a wider programme valued at approximately S$3.7 billion.
Three other rigs held by Rigco are excluded from the current transaction, with Keppel evaluating separate monetisation options for those assets.
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Deal Supports Keppel’s Asset-Light Strategy
The first six-rig transfer is expected to increase Keppel’s funds under management by approximately S$3.9 billion. The addition would move the group closer to its previously stated S$100 billion target for 2026, although the projected increase depends on transaction conditions and the fund becoming fully invested.
For Keppel, the structure supports its shift from holding capital-intensive legacy assets directly toward managing third-party capital and collecting recurring fees. It is also expected to improve gearing, release capital for reinvestment and create capacity for shareholder returns.
Keppel will, however, recognise an estimated S$92 million accounting loss from the sale of the six operational rigs in its first-half 2026 results. The loss includes the recycling of foreign-currency translation effects and does not change the expected cash proceeds.
Apollo Expands Its Asian Capital-Solutions Footprint
Apollo said the deal reflects growing demand for structured, investment-grade financing in Asia-Pacific. The alternative asset manager has originated more than $100 billion in bespoke capital solutions since 2020 and reported approximately $1.03 trillion in assets under management as of March 31, 2026.
The investment also gives Apollo access to an offshore rig market that the companies say is benefiting from high utilisation, an ageing global fleet and limited newbuild activity. Those conditions may support demand for modern rigs, although future returns will still depend on charter rates, operating performance, oil and gas investment cycles and the successful completion of the transaction.
Sources: Reuters / Keppel / Apollo
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