American Electric Power sells 1.4GW renewables portfolio to IRG Acquisition Holdings for $1.5bn

American Electric Power (AEP), listed under Nasdaq as AEP, has successfully finalized the sale of its expansive 1,365-megawatt (MW) unregulated renewables portfolio. The strategic acquisition was made by IRG Acquisition Holdings, a powerhouse consortium owned by market leaders like Invenergy, CDPQ, and funds overseen by Blackstone Infrastructure. Valued at an impressive enterprise worth of $1.5 billion, inclusive of project debt, this transaction ensures a robust net cash inflow for AEP of approximately $1.2 billion, post deductions from taxes, transactional fees, and other standard adjustments.

Julie Sloat, AEP’s dynamic president and chief executive officer, commented on the strategic sale, “Aligning with our focused vision of streamlining and mitigating business risks, this divestiture underscores our commitment to our core regulated operations.” Sloat further unveiled AEP’s ambitious investment blueprint for the upcoming five years, which revolves around channeling a whopping $40 billion predominantly into their regulated wires and generation ventures. “The capital garnered from this deal will propel our mission to revamp the energy grid, transition to a well-rounded generation catalog, and elevate customer experiences, all while reinforcing our financial foundation,” she added.

Kicking off in February 2023, AEP cemented the agreement for this asset sale. The deal met with comprehensive regulatory approvals, including green signals from authoritative bodies like the Federal Energy Regulatory Commission and the Committee on Foreign Investment in the United States, besides receiving requisite nods under pertinent competition laws.

This significant sale encompasses a diversified portfolio of 14 energy projects. Breaking it down, this includes a substantial 1,200 MW derived from wind energy and an additional 165 MW harnessed from solar power, spread across 11 states. These projects are anchored by long-standing contracts with a diverse clientele, including other utilities, corporate entities, and municipal bodies.

J.P. Morgan helmed the role of the primary financial advisor for this transaction, with Citigroup Global Markets also contributing as a financial counselor to AEP. On the legal front, Hunton Andrews Kurth LLP extended their expertise as AEP’s legal consultants for this mega-deal.