AEP partners with KKR, PSP Investments, secures $2.82B transaction

By Tamara Parker • Friday, January 10 10:20 • Permanent Link

American Electric Power (AEP) has announced a strategic partnership with 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. 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 19.9% minority equity interest represents approximately 5% of AEP’s total transmission rate base.

The transaction multiple of 30.3 times LTM P/E is highly attractive and represents a significant premium to AEP’s current stock price. This transaction provides highly efficient financing to support AEP’s five-year, $54 billion capital investment plan, which includes investments in transmission, distribution, and generation projects. It will also offset a significant amount of AEP’s $5.35 billion equity financing needs through 2029.

Upon closing, the transaction is expected to be immediately accretive to AEP’s earnings and credit profile. The partnership with KKR and PSP Investments, who are experienced investors in the utilities and energy space, allows AEP to maintain a controlling interest in its valuable transmission assets.

The transaction is subject to approval from the Federal Energy Regulatory Commission (FERC) and clearance from the Committee on Foreign Investment in the United States, with the expected closing in the second half of 2025.

AEP's five-year capital plan is critical to meeting growing energy demand and bolstering reliability for its customers. The company's focus on enhancing service for customers and supporting the growing energy needs of communities is evident in its $54 billion investment from 2025 through 2029.

AEP's commitment to operational excellence and creating value for stakeholders, along with its focus on safety and community engagement, positions the company to benefit its service territory through economic development and customer engagement.

Today the company's shares have moved 2.3% to a price of $94.42. For the full picture, make sure to review American Electric Power's 8-K report.

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