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KKR and PSP inject $2.82bn into AEP’s US transmission network

American conglomerate American Electric Power sold 19.9% of two transmission subsidiaries to KKR and PSP Investments, raising $2.82bn to support its five-year $54bn investment plan.

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American Electric Power Company Inc. (AEP) has finalised the sale of a 19.9% minority interest in its transmission subsidiaries operating in Ohio and Michigan to KKR & Co. Inc. and Canadian pension fund manager PSP Investments. The deal is valued at $2.82bn, according to a statement released on June 5 by the Columbus, Ohio-based company.

The transaction enables AEP to support its $54bn five-year investment programme aimed at modernising and expanding its infrastructure. The involved entities represent approximately 5% of AEP’s total transmission rate base, which spans several strategic territories in the US Midwest.

Expansion targets amid rising demand

AEP anticipates more than 20 gigawatts of new energy demand across its footprint by the end of the decade. Nearly 600 new and existing customers have already expressed interest in connecting to the network, representing potential demand of 180 gigawatts, according to internal company data.

The equity partnership with KKR and PSP Investments is intended to facilitate the infrastructure expansion needed to meet this growth. AEP will retain operation and maintenance responsibilities for the relevant facilities, allowing it to preserve operational control while leveraging external capital.

Long-term partners in critical infrastructure

KKR, through its infrastructure funds, and PSP Investments have confirmed their commitment to supporting AEP’s growth strategy in Indiana, Michigan and Ohio. The deal reflects a broader trend in the North American energy industry to seek structured financial partnerships to upgrade ageing networks.

According to Bill Fehrman, President and Chief Executive Officer of AEP, the alliance enables tangible progress on investment priorities aimed at enhancing grid reliability. Kathleen Lawler, Managing Director at KKR, stated that the investment would contribute to transmission system modernisation and meeting rising electricity demand.

Michael Rosenfeld, Managing Director of Infrastructure Investments at PSP Investments, said the partnership aligns with the institution’s long-term strategy to participate in the development of critical infrastructure in high-growth service territories.

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