Keppel to unlock S$1.2B through offshore rigs divestment into new private fund

SINGAPORE: Keppel is set to divest six operational legacy offshore rigs to its newly established Keppel Offshore Fund (KOF) this year in a deal valued at around $1.2 billion, as the company continues efforts to unlock value from its legacy assets while expanding its funds under management.

In a statement, the group said it expects to receive approximately $611 million in cash proceeds from the transaction.

The divestment is expected to contribute around $1.2 billion towards Keppel’s 2026 asset monetisation programme. It will also increase the group’s funds under management by about $3.9 billion.

Despite the sizeable transaction, Keppel expects to record an accounting loss of about $92 million in its first-half results. The company said this includes the recycling of foreign-currency translation losses into its profit or loss account.

To support the establishment of the fund, funds, accounts and entities managed by Apollo, together with an indirect subsidiary of Keppel, have agreed to subscribe for limited partnership interests in KOF, which will be managed by Keppel.

Apollo will provide the cash required for KOF to acquire the six operational rigs. Keppel, meanwhile, will meet half of its required capital contribution through an in-kind transfer, subject to the fulfilment of relevant conditions.

The company also plans to complete four additional legacy rigs before potentially transferring them into the fund between 2027 and 2028.

According to Keppel, these rigs are currently at different stages of construction. Their completion will be financed using cash retained within Rigco Holding Pte. Ltd. If eventually divested to the fund, the four rigs could generate aggregate cash proceeds of around $1.3 billion.

Beyond the asset sales, Keppel expects to benefit from ongoing income streams linked to the fund. As KOF’s investment manager, the company will earn advisory and recurring management fees, while also receiving a share of distributions through its investment in the fund.

The six operational rigs and the four planned future transfers form part of Keppel’s broader strategy for dealing with its legacy offshore assets. However, the company said the remaining three rigs from its portfolio of 13 legacy rigs are not included in the programme and that it is exploring alternative options to monetise those assets.