AEP to sell minority stake in utility transmission businesses for $2.8B
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Ohio-based American Electric Power on Friday announced a plan to sell a minority stake in two of its subsidiaries, including one headquartered in Indiana, for $2.82 billion.
The proposed agreement would see global investment firm KKR and Canada-based Public Sector Pension Investment Board, or PSP Investments, acquire a 19.9% equity interest in Fort Wayne-based Indiana Michigan Power and AEP Ohio.
AEP said the deal would allow the utility “to efficiently finance a growing segment of its business in the Midwest and enhance its ability to serve growing customer demand and provide reliable service.”
Proceeds from the proposed sale would support AEP’s five-year, $54 billion capital growth plan, the company said in a news release.
“Areas such as Ohio and Indiana are experiencing growth that has not been seen for decades,” said AEP President and CEO Bill Fehrman. “This transaction allows us to address a portion of our capital needs efficiently and at a very attractive valuation, benefiting our customers and supporting economic development in our states.”
AEP said the minority equity interest represents about 5% of its total transmission rate base.
“KKR’s infrastructure business has a long track record of investing behind the energy transition and electrification opportunities, and this investment in AEP sits squarely at the intersection of these two trends,” KKR Managing Director Kathleen Lawler said in a separate release. “The simplicity and stability of the assets, coupled with the robust demand for electricity, make AEP’s transmission assets an ideal investment for KKR.”
The transaction requires approval from the Federal Energy Regulatory Commission, as well as clearance from the Committee on Foreign Investment in the United States.
AEP expects the sale to close in the second half of 2025.
The utility said customers will not experience any changes as a result of the sale, and AEP employees will continue to operate and maintain the assets of Indiana Michigan Power and AEP Ohio.
AEP stock was up 0.82% to $93.02 per share at midday trading Friday.