US-based energy holding company Duke Energy has completed the sale of a 11.05% interest in its subsidiary, Duke Energy Indiana (DEI), to an affiliate of Singaporean sovereign wealth fund GIC Private.
The sale is the first phase of a two-phase transaction with GIC and has led to Duke Energy receiving $1.025bn in cash proceeds.
In January, the company agreed to sell a 19.9% stake in DEI for a $2.05bn consideration.
Duke Energy will use the sale proceeds to fund its $59bn capex plan and satisfy all its equity capital raising needs until 2025.
Under the terms of the agreement, the company can determine the timing of the second closing, which is expected to take place no later than January 2023.
Duke Energy chair, president and CEO Lynn Good said: “We are pleased to have GIC as a long-term investor in DEI, underscoring the value and growth potential of our Indiana operations.
“This transaction will allow us to accelerate our clean energy strategy across our regulated utilities and continue delivering sustainable value to our customers, communities and investors.”
The transaction has been approved by the Federal Energy Regulatory Commission (FERC) and Committee on Foreign Investment in the United States (CFIUS).
Duke Energy will continue to be DEI’s majority owner and sole operator following the deal.
GIC Infrastructure chief investment officer Ang Eng Seng 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.
“We are committed to actively engaging with Duke Energy’s management team to support their clean energy transition goals and build long-term sustainable value.”
Duke Energy’s electric utilities serve 7.9 million customers across North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.
Last month, the company reported a net income of $765m for the second quarter of this year, having reported a loss in the same period a year earlier.