Duke Energy sells 19.9% stake in Ind. utility to Singapore fund GIC for $2.05B

Duke Energy Corp. on Jan. 28 announced it will sell a nearly 20% interest in subsidiary Duke Energy Indiana LLC to an affiliate of Singapore sovereign wealth fund GIC Pte. Ltd. in an all-cash deal valued at $2.05 billion.

Duke Energy will remain the majority owner of Duke Energy Indiana, or DEI, and sole operator of the utility, the company said in a news release issued after market hours.

Under the terms of the agreement, GIC affiliate EPSOM Investment Pte. Ltd. will acquire a 19.9% indirect minority interest in DEI, which the company called "a significant premium to Duke Energy's current public equity valuation."

The transaction is expected to close in two phases, Duke Energy said, which aligns with the company's capital needs, and will allow Duke to forgo previous plans to raise $1 billion in common equity. The first closing, expected to occur in the second quarter of 2021, will see GIC acquire an approximately 11% interest in DEI, and the second closing, to occur by January 2023, will transfer the remaining approximately 8.9% interest. Payments will be evenly split.

In conjunction with the transaction announcement, Duke Energy announced a $5.00 to $5.30 adjusted earnings per share guidance range for 2021 and increased its long-term adjusted EPS growth rate to 5% to 7% through 2025, up from 4% to 6%.

Duke Energy also said proceeds from the transaction will fund an increased $58 billion to $60 billion five-year capital plan. To reflect near-term investment potential, Duke Energy previously increased its five-year capital plan to $58 billion from $56 billion for 2020 through 2024.

The deal is subject to approval by the Federal Energy Regulatory Commission and completion of a review by the Committee on Foreign Investments in the United States.

GIC has other holdings in North American utilities. In 2016 the Singapore sovereign wealth fund acquired an indirect 19.9% equity stake in ITC Holdings Corp. from Fortis Inc. for $1.23 billion. The same year, Epsom Investment boosted its stake to 44.39% from 31.01% in DQE Holdings LLC, the parent of Duquesne Light Co. and Duquesne Power LLC.