Apollo Global to Invest $1.5 Billion in Keppel's Oil Rig Spinoff Fund

Apollo Global Management has committed $1.5 billion to a new private fund by Singapore-based Keppel that will hold six operational oil rigs. The deal, announced by the two companies on Monday, allows Keppel to monetize non-core legacy assets while giving the U.S. investment firm significant exposure to a strong offshore energy market.

Details of the Transaction

The agreement involves the sale of six operational rigs from Keppel's indirect subsidiary, Rigco Holding Pte, to the newly established Keppel Offshore Fund for S$1.2 billion. Keppel stated it will contribute 50% of the capital to the new fund through an indirect unit.

This initial transaction is expected to provide Keppel with $478 million in cash proceeds this year. According to the companies, the deal is a strategic move for Apollo to capitalize on the region's offshore energy sector, which is currently experiencing high utilization rates and favorable long-term demand trends.

Keppel's Divestment Strategy

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This sale is part of Keppel's broader strategy to divest 10 oil rigs for a total of nearly S$3.7 billion ($2.87 billion). The conglomerate's stated goal is to unlock capital for new investments, reduce corporate debt, and deliver returns to shareholders.

The divestment of the first six rigs is projected to increase Keppel's funds under management by approximately S$3.9 billion. However, the company also disclosed it will book an accounting loss of S$92 million in its first-half results, scheduled for July 30, as a result of the transaction.

Future Plans

Keppel also intends to divest four additional rigs, which are currently under construction, into the new fund between 2027 and 2028. That subsequent transaction is expected to generate an additional $988 million in cash proceeds for the company, completing its planned divestment of the 10-rig portfolio.