Apollo invests $1.5 billion in Keppel-managed legacy rig fund

Apollo has agreed to invest $1.5 billion in a new Keppel-managed fund established to hold up to ten legacy offshore drilling rigs, in one of the larger recent private equity commitments to the ageing rig segment. The Keppel Offshore Fund will initially acquire six operational rigs from Keppel subsidiary Rigco Holding for approximately S$1.2 billion, equivalent to about $957 million.

Under the structure, Keppel is expected to receive around $478 million in cash from the first phase of the transaction, providing the group with liquidity while transferring the rigs into a dedicated investment vehicle designed to manage them over their remaining operating life. The arrangement allows Keppel to monetise a portion of its legacy rig portfolio while retaining a management role.

Legacy offshore drilling rigs, many built during previous investment cycles, continue to find work servicing existing production fields even as newer, more efficient units capture the bulk of fresh contract awards. Private equity investors have shown growing interest in acquiring stakes in such assets, attracted by steady cash flows from operating contracts even where long-term growth prospects are limited.

The involvement of a major alternative asset manager such as Apollo in a rig-focused fund reflects continued financial sector appetite for offshore energy infrastructure, even as the broader industry weighs the pace of the energy transition against near-term demand for oil and gas production capacity. Structures of this kind allow rig owners to access external capital without fully exiting the segment.

The transaction is expected to close in phases, with the initial six-rig acquisition marking the first stage of a fund intended to eventually hold up to ten vessels. Further details on the fund's remaining rig acquisitions and long-term strategy have not been disclosed.