AEP Completes Sale of Renewable Portfolio for $1.5B

American Electric Power (AEP) has completed the sale of its 1,365-megawatt unregulated, contracted renewables portfolio to IRG Acquisition Holdings, a partnership owned by Invenergy, Caisse de dépôt et placement du Québec )CDPQ and funds managed by Blackstone Infrastructure, at an enterprise value of $1.5 billion including debt.

AEP nets approximately $1.2 billion in cash after taxes, transaction fees and other customary adjustments.

The portfolio includes 14 projects, representing 1,200 MW of wind and 165 MW of solar in 11 states.

The sale of the portfolio is part of AEP’s strategy to streamline its business and focus on its regulated operations. The company plans to invest nearly $40 billion over the next five years in its regulated wires and generation businesses.

The proceeds from the sale will be used to “modernize the energy grid, diversify the generation portfolio and improve customer service, while also strengthening the company’s balance sheet,” said Julie Sloat, AEP president and CEO.

AEP signed an agreement to sell the assets in February and obtained the necessary approvals, including clearance from the Federal Energy Regulatory Commission and the Committee on Foreign Investment in the United States.

Another primary aim for AEP is to increase the return on equity at its utilities, which combined for a 9.1% ROE last year. The Columbus, OH-based business anticipates that the total ROE will rise to 9.4% this year due to higher rates in areas such as Louisiana, Virginia, and Oklahoma.

The company was advised by J.P. Morgan and Citigroup Global Markets for this transaction, while Hunton Andrews Kurth LLP served as its legal counsel.