AEP Secures Minority Equity Interest Investment in Ohio and Indiana & Michigan Transmission Companies

AEP Secures Minority Equity Interest Investment in Ohio and Indiana & Michigan Transmission Companies

COLUMBUS, Ohio, Jan. 9, 2025 /PRNewswire/ — American Electric Power (Nasdaq: AEP) today announced a definitive agreement for a strategic partnership between KKR and PSP Investments to acquire a 19.9% equity interest in the company’s Ohio and Indiana & Michigan Transmission Companies (Transcos) for $2.82 billion. The Transcos are transmission-only, Federal Energy Regulatory Commission (FERC) regulated utilities that build, own and operate transmission infrastructure.

The transaction multiple of 30.3 times LTM P/E is highly attractive and is a significant premium to AEP’s current stock price. The 19.9% minority equity interest represents approximately 5% of AEP’s total transmission rate base.

This transaction allows AEP 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. The proceeds will support AEP’s five-year, $54 billion capital growth plan, which includes investments in transmission, distribution and generation projects and will offset a significant amount of AEP’s $5.35 billion equity financing needs through 2029. Upon closing, the transaction will immediately be accretive to AEP’s earnings and credit profile.

“Executing on our five-year capital plan is critical to meeting growing energy demand and bolstering reliability for our customers. Electricity demand is anticipated to grow significantly in AEP’s footprint by the end of the decade,” said Bill Fehrman, AEP president and chief executive officer. “Areas such as Ohio and Indiana are experiencing growth that has not been seen for decades. 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.”

Fehrman continued, “We are pleased to launch this strategic partnership with two of the world’s premier global infrastructure investors. KKR and PSP Investments are experienced investors in the utilities and energy space with a proven track record of successful infrastructure investments. This transaction allows AEP to maintain a controlling interest in our valuable transmission assets, which we will support through growth and modernization initiatives.”

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