American Electric Power (AEP) stock gained 2% after private equity firm KKR & Co. (KKR), along with Canada’s PSP Investments, announced a 19.9% stake in two of its units. The stake is valued at $2.82 billion and involves AEP’s Ohio and Indiana transmission and its Michigan transmission companies. The sale of the minority units is expected to close in the second half of 2025.
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Further Details About the Minority Interest
The investing duo have formed a 50-50 strategic partnership for the acquisition. KKR, one of the U.S.’ largest investment firms, is financing the deal from its core infrastructure strategy. The funding will enable AEP’s units to meet the growing electricity demand as well as bolster the grid’s reliability. AEP aims to utilize the proceeds to fund its five-year, $54 billion capital plan that involves investing in transmission infrastructure projects. AEP’s transmission system boasts some 40,000 miles of wires and claims to be one of the largest in the U.S.
Notably, AEP will continue to remain the majority owner and operate both these transmission units as usual. AEP believes that the units in Ohio, Indiana, and Michigan are the fastest-growing service areas in its portfolio, aided by a solid manufacturing industrial setup. The U.S. is witnessing a rapid growth in electricity demand, especially from data centers, thanks to the ongoing AI (artificial intelligence) boom. Consequently, electric power generation companies such as AEP are set to become large beneficiaries of this growing demand.
Is AEP Stock Good to Buy Now?
Unfortunately, analysts prefer to remain on the sidelines on American Electric Power stock. On TipRanks, AEP stock has a Hold consensus rating based on three Buys, seven Holds, and two Sell ratings. Also, the average American Electric Power price target of $101.25 implies 9.7% upside potential from current levels. In the past year, AEP shares have gained 16.3%.
Is KKR Stock a Good Investment?
Wall Street remains highly bullish about KKR’s stock trajectory owing to its strong track record of successful investments. On TipRanks, KKR stock has a Strong Buy consensus rating based on 11 Buys and two Hold ratings. The average KKR & Co. price target of $170.85 implies 15.3% upside potential from current levels. Remarkably, KKR shares have gained nearly 81% in the past year.
