Apollo Commits $1.5 Bn to Rig Fund as Keppel Deepens Asset-Light Shift

Apollo Global Management‘s funds and affiliates have committed $1.5 Bn to the Keppel Offshore Fund, a vehicle that will acquire six legacy jack-up drilling rigs from Keppel-owned Rigco Holding. Keppel will manage the fund and remain invested alongside Apollo, while four more rigs could be added to the portfolio between 2027 and 2028.

The transaction allows Keppel to release capital from its legacy rigs amid tight global offshore-rig supply. It also advances the group’s integrated asset manager-and-operator model, which combines asset management with infrastructure operations.

The initiative links Keppel’s industrial past with its asset-management strategy. Rather than exiting the rigs entirely, the group will move them from direct ownership into a managed fund. It will receive a share of distributions from the vehicle and earn advisory and recurring management fees as the fund’s investment manager.

Keppel will transfer six operational rigs to the fund for about S$1.2 Bn in 2026 and expects to receive $478 Mn in cash from the first phase.

Apollo will provide the cash used by the fund to acquire the six rigs through a partial drawdown of its $1.5 Bn commitment. Keppel will satisfy 50% of the fund contributions required for the acquisition through an in-kind contribution rather than cash.

The deal is expected to add about S$3.9 Bn to Keppel’s funds under management (FUM). The figure represents the fund’s projected size once its committed capital is fully invested and fund-level borrowing is included. It is distinct from the S$1.2 Bn purchase price for the first six rigs.

The wider programme to monetise up to 10 of Rigco’s 13 rigs is valued at about S$3.7 Bn. Keppel may complete and transfer another four assets — a harsh-environment jack-up, a drillship and two harsh-environment semi-submersibles — by 2028, potentially generating $988 Mn more in cash. Three further rigs sit outside the programme.

However, these transfers remain conditional. The rigs are at different stages of completion, their prices must fall within agreed valuation ranges, and Keppel retains the right not to sell them. The completion of the four rigs would be financed with cash already held in Rigco.

Keppel will record an accounting loss of about S$92 Mn from the six-rig divestment, including the reclassification of foreign-currency translation losses to profit or loss. The charge will be recognised in its first-half results, scheduled for July 30. Completion remains subject to regulatory approvals, required consents and other closing conditions.

From Shipyards to Infrastructure Platforms

Keppel established its industrial reputation through more than half a century of shipbuilding and offshore engineering. A sharp decline followed the oil-price slump that began in 2014, with rig orders falling and financing tightening.

Its offshore and marine division entered years of impairments, losses and restructuring. In 2023, Keppel exited the core business through its combination with Sembcorp Marine, creating the company now known as Seatrium.

The legacy rigs were excluded from that transaction and placed in Rigco for eventual completion and monetisation.

Keppel took full control of Rigco and its 13 rigs in late 2024, allowing it to control when and how the assets were completed and monetised. The move also gave it control of Rigco’s S$843 Mn cash reserve to finance the unfinished rigs.

The company said at the time that it had no intention of returning to the offshore and marine business.

Keppel did not replace its industrial operations with a purely financial business. Instead, it built an integrated model that combines fund management with the engineering and operating capabilities needed to develop and run hard infrastructure.

Its portfolio comprised 39 data centres with more than 800 MW of gross power capacity at the end of 2025, including projects under development.

Its sponsored Keppel DC REIT became Asia’s first pure-play listed data-centre trust in 2014. By the end of March 2026, it held 25 data centres across 10 countries, with about S$6.3 Bn in assets under management.

Keppel also co-developed the Bifrost Cable System with Meta and Telin, linking Singapore directly with the US West Coast. All five fibre pairs in its portfolio have been committed, with an estimated total contract value of $1.3 Bn, including operations and maintenance income over 25 years.

In May, its 600 MW Keppel Sakra Cogen Plant began commercial operations on Jurong Island. The hydrogen-compatible facility increased Keppel’s Singapore power-generation capacity by about 45%.

Together, these businesses show the operating capabilities behind Keppel’s asset-management strategy. Across its wider portfolio, the company also recycles capital through private funds, listed trusts and investment partnerships.

The offshore fund extends that model to the assets most closely associated with the business Keppel left behind. The group will manage the fund’s rig portfolio using technical expertise built over decades in offshore engineering.

The transformation has already changed Keppel’s earnings mix. Its continuing businesses, which the company calls the ‘New Keppel’, reported a 39% increase in net profit to S$1.1 Bn in 2025.

Recurring income rose 21% to S$941 Mn; return on equity climbed to 18.7% from 14.9% a year earlier, and funds under management reached S$95 Bn. Asset-management fees totalled S$453 Mn, with FUM and fees both compounding at about 20% annually over the preceding five years.

Keppel had announced S$14.5 Bn of asset monetisation between October 2020 and the end of 2025. Its total shareholder return reached 58.5% last year, compared with 28.8% for Singapore’s Straits Times Index.

Keppel said on July 28 that its FUM had surpassed S$100 Bn, ahead of the original end-2026 target.

The rig fund therefore sits within Keppel’s wider transformation rather than marking a return to offshore and marine. It uses the group’s remaining industrial assets and technical expertise to expand the fund-management platform it is building.

Why the Timing Works

Keppel said high utilisation and tight supply had created a favourable window in the offshore drilling market.

After a decade of limited newbuild activity, higher construction costs, longer delivery periods and tighter financing requirements continue to restrict fresh supply as the global fleet ages.

The post-2014 contraction also weakened Keppel’s rig business as customers placed fewer new orders and financing became harder to secure.

A decade later, the resulting shortage of replacement capacity is supporting demand for modern rigs already in operation. Keppel is monetising assets left behind by its former business while comparable equipment remains scarce.

The same downturn that damaged Keppel’s rig-building model also helped create the supply constraints supporting demand for its remaining rigs today.

Why Apollo Fits the Deal

Apollo, a New York-headquartered alternative asset manager, brings the other side of the transaction. It was founded in 1990 by Leon Black, Josh Harris and Marc Rowan after Drexel Burnham Lambert collapsed. All three had worked at the investment bank, which helped finance the leveraged-buyout boom of the 1980s.

Apollo’s early investments focused on distressed and complex assets. Its 1991 acquisition of Executive Life Insurance Company’s bond portfolio helped establish what Apollo says became the largest credit platform among alternative asset managers.

That history helps explain Apollo’s comfort with complex assets and negotiated structures. The Keppel transaction applies that structuring capability to an investment-grade capital solution rather than distressed debt.

It is not a conventional buyout. Apollo-managed funds and affiliates are providing capital to a vehicle holding operating equipment, while Keppel remains the fund manager and an investor.

Apollo has since grown into one of the world’s largest alternative asset managers. It had about $1.03 Tn in assets under management as of March 31, 2026, as record first-quarter inflows helped push the figure past $1 Tn for the first time.

The firm originated $71 Bn during the quarter and generated record capital-solutions fees of $246 Mn, up about 60% from a year earlier.

Athene, Apollo’s retirement-services business, is an important part of that model. It issues and reinsures retirement and savings products, creating long-duration liabilities that Apollo matches with investments.

Athene’s investment portfolio remains subject to insurance regulation and asset-liability requirements. Its persistent liability base supports a large pool of capital suited to investment-grade credit and asset-backed transactions.

Since 2020, Apollo has originated more than $100 Bn in bespoke capital solutions for companies such as Sony, Intel, bp, Broadcom and Air France-KLM. The Keppel partnership is part of its push to operate as a financing provider, rather than only a private equity buyer.

That broader model fits Keppel’s needs, although Apollo has not disclosed which of its managed funds or affiliates will provide the capital, or whether Athene is among them. Apollo gains exposure to operating offshore assets without buying Keppel or assuming responsibility for running the rigs. Keppel receives third-party capital without surrendering its economic interest or its role as manager.

Apollo described the transaction as one of the first of its kind in Southeast Asia.

The deal brings together four elements: investable hard assets, an experienced manager, a credible fund platform and institutional capital. Keppel and Apollo each provide part of that architecture.

A straight asset sale would not offer the same combination of cash proceeds, retained exposure, additional FUM and recurring fees. A corporate loan would raise capital but would not move the rigs into Keppel’s fund-management platform.

The transaction instead changes both the ownership and earnings structure of the assets. Keppel receives cash, retains exposure and adds FUM, while Apollo supplies the capital without taking responsibility for the fleet’s operation.

The deal also shows that Keppel’s new identity is not entirely separate from its old one. The company is using the assets and expertise of its industrial past to expand its fund-management platform.

The rigs Keppel spent years trying to leave behind may now help prove the asset-manager model it wants the market to value.

(With inputs from agencies)