Duke Energy to divest $2bn worth stake in Duke Energy Indiana to GIC

Duke Energy has signed a deal worth $2.05 billion to sell a 19.9% stake in its Indiana electric utility subsidiary – Duke Energy Indiana (DEI) to an affiliate of Singapore’s sovereign wealth fund GIC Private.

The electric power holding company will retain a majority stake of 80.1% in Duke Energy Indiana, while continuing its operations.

Duke Energy will utilize the sale proceeds from the transaction to cover its increased capital plan of $58-$60 billion. The company’s five-year capital is targeted at accelerating its clean energy transition, which includes doubling its renewable energy capacity to 16GW by the year 2025 and to 40HW by 2050 for regulated utilities.

Besides, the proceeds from the sale of stake in Duke Energy Indiana will be used for redeploying capital for underpinning increased growth investments of its electric utility subsidiaries.

Lynn Good – Duke Energy chair, president, and CEO said: “We are pleased to have GIC as a long-term investor in DEI.

“This agreement with GIC allows Duke Energy to not only partner with a highly respected global investor, it also strengthens our confidence as we increase our long-term adjusted EPS growth rate to 5 to 7 percent.

“With this agreement, Duke Energy is well positioned to effectively finance our robust investment plan in a clean energy future and continue delivering sustainable value to our investors.”

Duke Energy will get the sale proceeds in a couple of evenly split payments. The first of which will be made in the second quarter of this year, while the other one is to be made no later than January 2023 at the discretion of Duke Energy.

According to the electric power holding company, the sale of stake will allow it to cancel its previously announced plan of raising common equity of $1 billion.

Duke Energy to divest $2bn worth stake in Duke Energy Indiana to GIC. Photo courtesy of Andrew Simpson from Knoxville, TN, United States/Wikipedia.org.

GIC will be investing in a newly formed intermediate holding firm of which Duke Energy Indiana will be a wholly-owned subsidiary. Corresponding to the minority stake, GIC will be entitled to certain limited rights.

Ang Eng Seng – GIC Chief Investment Officer of Infrastructure said: “As a long-term investor, GIC strongly believes that companies focused on meaningful sustainability practices will create better risk-adjusted returns over the long term. Duke Energy’s proven management team and clear commitment to a clean energy transition make this an attractive partnership opportunity for GIC.

“This capital will help create long-term value by directly supporting Duke Energy’s ability to capitalize on their stated ESG and decarbonization goals. We look forward to a successful transaction and long-term investment.”

The deal is subject to receipt of approval by the Federal Energy Regulatory Commission (FERC) along with the completion of review by the Committee on Foreign Investment in the United States (CFIUS), in addition to other customary closing conditions.