NCL Corp., which operates cruise ships under the Norwegian Cruise Line and NCL America brands, announced on Aug. 17th that private equity firm Apollo Management LP will make a $1 billion cash investment in return for 50 percent ownership of the cruise line.

Star Cruises of Malaysia, which will retain the other 50 percent ownership of NCL, said the investment will help expand what by the end of the year will be the youngest fleet in the cruise ship industry and will strengthen NCL’s balance sheet.

NCL, which will add another ship, the Norwegian Gem, to its fleet in October, has appeared a bit stretched financially -- particularly after placing orders for three new larger ships designed to let it better compete with rivals Carnival Corp. and Royal Caribbean..

“To have an investment on this scale by one of the very top names in the private equity world is a huge vote of confidence in the new NCL we have created since Star Cruises became the owner in 2000,” said NCL CEO Colin Veitch.

The move by Apollo seems certain to spur talk of further consolidation in the cruise ship industry, since the equity firm earlier this year took a majority position in upscale Oceania Cruises with an infusion of cash and assumption of debt valued at $850 million.

For the record, NCL today said "Oceania is a separate investment made by Apollo in a different segment of the cruise market. It is expected to remain a separate investment and a separate operating company."

As part of the deal, Apollo and Star also entered into a sub-agreement designed to support NCL America, which has suffered from lower than expected revenue yields and high crew turnover as it seeks to establish a dominant position in the Hawaiian market .

This agreement provides for deferred consideration to be paid to Star by NCL in the future, giving NCL America time to realize the benefits of various recently-implemented measures.

NCL said it expects the transaction to be completed early in the fourth quarter.