Keppel to divest six oil rigs through new private fund for S$1.2 billion
Four other unfinished rigs that may be divested later could generate about S$1.3 billion in cash proceeds
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[SINGAPORE] Asset manager Keppel announced on Monday (Jul 27) that it intends to monetise up to 10 oil rigs through a new private fund, starting with the divestment of six operational rigs for around S$1.2 billion.
The company noted that it expects to receive a cash consideration of about S$611 million from the initial divestment through its indirect subsidiary, Rigco.
Keppel said it will recognise an accounting loss of roughly S$92 million, which includes the recycling of foreign currency translation loss to profit or loss. This loss will be booked in its H1 financial results, slated for Jul 30.
Keppel noted that the transaction is expected to raise its funds under management by roughly S$3.9 billion.
As the manager of the newly established Keppel Offshore Fund (KOF), Keppel said it will earn recurring management fees, certain advisory fees, and a share of distributions from its retained stake in the fund.
Keppel’s indirect subsidiary as well as investment manager, Apollo, has agreed to subscribe for limited partnership interests in the new fund.
Beyond the initial six operational oil rigs, Keppel noted in its bourse filing that it intends to progressively complete and potentially divest four additional rigs to KOF between 2027 and 2028, subject to certain conditions being met. The construction of the four oil rigs are to be funded using existing cash retained in Rigco, noted Keppel.
This could generate a total of around S$1.3 billion in cash proceeds to Keppel.
Loh Chin Hua, chief executive officer of Keppel noted that the transaction “establishes a clear pathway for the progressive monetisation of the legacy rigs”.
“At the same time, through our stake in KOF, we will remain invested alongside our limited partner, Apollo, in a high-quality modern rig fleet, positioning us to benefit from the improving long-term outlook and tight supply in the rig market,” he added.
The company said that while the remaining three of the 13 legacy rigs held by Rigco are not included in this transaction, it will be “exploring various options” for their monetisation.
Shares of Keppel closed 0.9 per cent or S$0.10 lower at S$11.35 on Monday, before the announcement.
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