KKR and Public Sector Pension Investment Board ( PSP Investments ) have invested US$2.82 billion for a 19.9% equity interest in American Electric Power's ( AEP ) Ohio, Indiana and Michigan transmission companies.

The minority stake represents approximately 5% of AEP’s total transmission rate base.

Regulated by the Federal Energy Regulatory Commission, the companies build, own, and operate transmission infrastructure. The transaction proceeds will be used to support AEP’s five-year, US$54 billion capital plan.

JP Morgan Securities acted as exclusive financial adviser while Morgan Lewis & Bockius acted as legal counsel to AEP. Simpson Thacher represented KKR and PSP Investments. Milbank advised the lenders in connection with the financing of the acquisition.

More than 20 gigawatts of new power demand is expected across AEP’s footprint by the end of the decade. In addition, AEP continues to see further interest from almost 600 new and existing customers representing nearly 180GW of energy demand looking to connect to the company’s transmission system.

“As demand for reliable, modernized energy infrastructure continues to rise, transactions like this reflect the urgent need for renewed investment in the US power grid,” says Dan Bartfeld, chair of Milbank’s global project, energy and infrastructure finance group.

“This transaction also underscores the strength of the sector and the essential role of lender-backed capital in advancing long-term grid resilience,” adds global project, energy and infrastructure finance partner Sean O’Neill.

PSP Investments is one of Canada's largest pension investors with US$265 billion of net assets under management as of March 31 2024. It manages a diversified global portfolio composed of investments in capital markets, private equity, real estate, infrastructure, natural resources, and credit investments.