Keppel Ltd. Gains Full Control Over Legacy Rigs to Drive Asset Monetisation

Keppel Ltd., a prominent player in the global asset management sector, is making strategic moves to secure full control over 13 legacy offshore rigs as part of its asset monetisation strategy. The company is poised to complete a Selective Capital Reduction (SCR) exercise that will see it take command of Rigco Holding Pte. Ltd. (Asset Co), transforming it into a wholly-owned subsidiary.

Currently, Keppel holds a 10% stake in Asset Co, alongside S\$139 million in perpetual securities and approximately S\$4.3 billion in vendor notes. With the successful completion of the SCR exercise anticipated by the end of 2024, Keppel will cancel the shares not held by it, gaining complete control over Asset Co and its substantial S\$843 million in cash reserves as of September 2024.

This strategic acquisition is a cornerstone of Keppel’s asset-light business model. The company plans to establish the Keppel Offshore Infrastructure Fund, a dedicated private fund to manage the legacy rigs and its 49% stake in Floatel. This fund aims to attract third-party capital and offer the potential for future monetisation through securitisation routes.

Keppel’s CEO, Mr. Loh Chin Hua, emphasized that gaining control over Asset Co and its advanced rig fleet, half of which is already contracted and generating stable cash flows, positions the company to better manage risks and realise asset potential. Amidst improving offshore rig market conditions, this move is expected to unlock funds for debt reduction, growth reinvestment, and shareholder rewards.

Furthermore, the global drilling fleet’s rapid aging, coupled with underinvestment in new supply, underscores the demand for premium rigs, especially in the jackup market. Keppel’s strategic positioning allows it to offer more cost-effective and quicker solutions for operators needing additional rigs, turning these legacy assets into fee-bearing funds under management.

For shareholders, these developments could be price-sensitive, given the potential for increased asset value and returns. The shift in control and subsequent monetisation efforts are likely to influence Keppel’s share value, offering a compelling opportunity for investors.

For more information, shareholders and interested parties can contact Ivana Chua, Managing Director of Corporate Communications at Keppel Ltd.

Disclaimer: This article is intended for informational purposes only and should not be considered as financial advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.