GIC Buys Stake in Duke Energy Indiana

Posted on 01/29/2021


Duke Energy Corporation’s (Duke Energy) (NYSE: DUK) is company headquartered in Charlotte, N.C.. Duke Energy is one of the largest energy holding companies in the U.S. It employs 29,000 people and has an electric generating capacity of 51,000 megawatts through its regulated utilities and 2,300 megawatts through its nonregulated Duke Energy Renewables unit.

Singapore’s GIC Private Limited made a 19.9% investment in Duke Energy Indiana (DEI), a subsidiary of Duke Energy, for a total purchase price of US$ 2.05 billion, a significant premium to Duke Energy’s current public equity valuation. Duke Energy will continue to operate DEI and will remain the majority owner, with an 80.1% stake in the business.

Proceeds from the transaction will fund Duke Energy’s increased US$ 58 to US$ 60 billion capital plan – a five-year plan that will accelerate its clean energy transition – and redeploy capital to support increased growth investments within its portfolio of regulated utilities. Given the transaction structure, Duke Energy will receive proceeds in two, separate phases to efficiently align with the company’s capital needs. The transaction allows Duke Energy to forego its previously announced plan to raise US$ 1 billion of common equity.

The first closing is expected to occur in the second quarter of 2021. Under the terms of the agreement, Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023.

GIC will invest in a newly formed intermediate holding company of which DEI will be a wholly owned subsidiary. GIC will receive certain limited rights commensurate with the minority stake.

The transaction is subject to customary closing conditions, including approval from the Federal Energy Regulatory Commission (FERC) and completion of review by the Committee on Foreign Investment in the United States (CFIUS).

Advisors

J.P. Morgan Securities LLC served as Duke Energy’s lead financial advisor, and Centerview Partners also served as a financial advisor. Skadden, Arps, Slate, Meagher & Flom LLP served as Duke Energy’s legal advisor.

Barclays served as GIC’s exclusive financial advisor. Sidley Austin LLP served as GIC’s lead legal advisor alongside Steptoe & Johnson LLP and Ice Miller LLP.

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