Keppel Expands Rig Operations and Plans New Private Fund

Keppel Corporation, a Singapore-based global asset manager and operator, has announced a significant expansion of its rig operations and the launch of a new private fund. These strategic moves reflect the company's commitment to growth and diversification in the energy and infrastructure sectors.

Keppel Offshore & Marine (Keppel O&M), a wholly-owned subsidiary of Keppel Corporation, has restructured its business into three parts: Rig Co, Development Co (Dev Co), and Operating Co (Op Co). This strategic move enables Keppel O&M to focus on higher value-adding work and reduce its exposure to the volatile oil and gas market. The Rig Co will manage completed rigs, while the Dev Co will complete uncompleted rigs, and the Op Co will transition into a developer and integrator role, focusing on design, engineering, and procurement.

Keppel O&M's restructuring is expected to enhance short-term cash flow and profitability. The Rig Co will generate steady cash flow through chartering and marketing activities, while the Dev Co will prudently manage cash flow to complete rigs with firm contracts. Upon completion, these rigs can be sold or put to work, further enhancing cash flow. The Op Co, as a developer and integrator, will focus on higher value-adding work, driving long-term profitability.

In addition to its rig operations, Keppel Corporation has announced the first close of its third private credit fund, Keppel Private Credit Fund III, with approximately US$300 million of committed capital. The fund was launched earlier this year with a target fund size of US$1 billion. Fund III focuses on providing loans to companies with defensive infrastructure-like operating businesses across a wide range of real asset sectors in Asia Pacific, including green energy, transport, telecom, logistics, and other core infrastructure.

Keppel Private Credit Fund III has attracted capital commitments from top-tier global institutional investors, with Keppel, as the sponsor, committing US$100 million to the vehicle. The fund's mandate is to provide loans to companies with defensive infrastructure-like operating businesses across a wide range of real asset sectors in Asia Pacific, including green energy, transport, telecom, logistics, and other core infrastructure.

The successful launch of Keppel Private Credit Fund III is a significant step towards Keppel's long-term financial goals. The fund's focus on providing loans to companies with defensive infrastructure-like operating businesses positions it to capitalize on Asia Pacific's growing demand for infrastructure developments. With a successful first close of US$300 million and a target fund size of US$1 billion, Fund III is poised to deliver attractive risk-adjusted returns with downside protection, as demonstrated by the low- to mid-teens returns of Fund I and Fund II.

In conclusion, Keppel Corporation's expansion of rig operations and the launch of Keppel Private Credit Fund III reflect the company's commitment to growth and diversification in the energy and infrastructure sectors. The restructuring of Keppel O&M into a developer and integrator of offshore energy and infrastructure assets is expected to enhance short-term cash flow and profitability, while the new private fund is poised to deliver attractive risk-adjusted returns with downside protection. These strategic moves position Keppel Corporation to capitalize on the growing demand for renewable energy and infrastructure projects, driven by the global energy transition and sustainability concerns.