American Electric to sell 19.9% equity interest in two Transcos for $2.82B

American Electric Power (AEP) announced a definitive agreement for a strategic partnership between KKR (KKR) and PSP Investments to acquire a 19.9% equity interest in the company’s Ohio and Indiana & Michigan Transmission Companies for $2.82B. “The Transcos are transmission-only, Federal Energy Regulatory Commission 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,” AEP stated. “Customers and employees will not experience any changes as a result of this transaction. Long term, states and customers should benefit from the increased economic development opportunities enabled by investment in the transmission system. AEP’s employees will continue to operate and maintain the Transcos’ assets. The transaction requires approval from FERC and clearance from the Committee on Foreign Investment in the United States. The transaction is expected to close in the second half of 2025,” the company added.