The Caisse de dépôt et placement du Québec has agreed to buy 15 percent of a subsidiary of AES Corp (NYSE: AES) that owns 100 percent of IPALCO Enterprises Inc, a U.S. utility holding company. The acquisition price is US$244 million. The Caisse also plans to invest around US$349 million in IPALCO through 2016, in exchange for a 17.65 percent equity stake. Proceeds will fund current growth and environmental projects at Indianapolis Power & Light Co. Following the close of the deals, expected in the first half of 2015, the Caisse will have direct and indirect interests in IPALCO totaling 30 percent.
AES Announces Agreement to Sell Minority Interest in IPALCO Enterprises, Inc. to La Caisse de dépôt et placement du Québec
ARLINGTON, Va. & MONTRÉAL–(BUSINESS WIRE)– The AES Corporation (NYSE:AES) announced today that it has entered into an agreement with La Caisse de dépôt et placement du Québec (CDPQ), a long-term institutional investor headquartered in Quebec, Canada. Pursuant to the agreement, CDPQ will purchase 15% of AES US Investments, Inc. (AES US Investments), a wholly-owned subsidiary of AES that owns 100% of IPALCO Enterprises, Inc. (IPALCO), for US$244 million. In addition, CDPQ will invest approximately US$349 million in IPALCO through 2016, in exchange for a 17.65% equity stake, funding existing growth and environmental projects at Indianapolis Power & Light Company (IPL).
After completion of these transactions, CDPQ’s direct and indirect interests in IPALCO will total 30%, AES will own 85% of AES US Investments, and AES US Investments will own 82.35% of IPALCO. There will be no change in management or operational control of AES US Investments or IPALCO as a result of these transactions.
“We are pleased to announce this strategic partnership with CDPQ, which will support IPL’s strong investment program in gas-fired generation and environmental upgrades,” said Andrés Gluski, AES President and Chief Executive Officer. “These transactions are in line with our demonstrated ability to incorporate financial partners at the business- and project-level. We look forward to working with CDPQ on additional partnering opportunities in the United States and other select countries in the Americas.”
“This investment perfectly fits our profile as a long-term investor in the infrastructure sector,” said Macky Tall, CDPQ Senior Vice President, Private Equity and Infrastructure. “Moreover, this partnership opens new opportunities with AES across the Americas. AES is well established in markets such as Mexico, Colombia, Chile and Brazil and we look forward to working with AES on other key projects.”
AES expects these transactions to be modestly accretive to Adjusted EPS based on reduced equity commitments from AES to fund existing growth and environmental projects at IPL and the initial cash investment by CDPQ, which AES will invest in line with its stated capital allocation framework.
IPL is in the process of completing a US$1.4 billion capital expenditure program to comply with environmental regulations and meet the future needs of its customers. This capital expenditure program will be funded with IPL’s existing capital structure of approximately 45% equity and 55% debt. As of September 30, 2014, AES has already funded US$156 million of the equity commitment. The first US$349 million of the remaining equity amount will be funded entirely by CDPQ, an additional US$62 million is expected to be invested by AES and CDPQ proportionally and the remainder is expected to be funded by cash from operations at IPL. This program includes the previously approved projects to comply with Mercury and Air Toxics Standards (MATS), construct the 671 MW Eagle Valley combined cycle gas turbine plant, and convert 200 MW from coal to natural gas. It also includes projects to comply with wastewater treatment requirements and convert an additional 410 MW from coal to natural gas, which are pending regulatory approval. After completion of this capital expenditure program, IPL’s coal capacity will decrease to approximately 44% in 2017, from 74% today.
Subject to customary regulatory approvals, including from the Federal Energy Regulatory Commission and the Committee on Foreign Investments in the United States, these transactions are expected to close in first half 2015.
The AES Corporation (NYSE:AES) is a Fortune 200 global power company. We provide affordable, sustainable energy to 20 countries through our diverse portfolio of distribution businesses as well as thermal and renewable generation facilities. Our workforce of 17,800 people is committed to operational excellence and meeting the world’s changing power needs. Our 2013 revenues were US$16 billion and we own and manage US$40 billion in total assets. To learn more, please visit www.aes.com. Follow AES on Twitter @TheAESCorp.
About La Caisse de dépôt et placement du Québec
La Caisse de dépôt et placement du Québec is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at June 30, 2014, it held CAD$214.7 billion in net assets. As one of Canada’s leading institutional fund managers, La Caisse invests in major financial markets, private equity, infrastructure and real estate, globally. For more information: www.lacaisse.com.
AES Safe Harbor Disclosure
This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’ current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.
Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’ filings with the Securities and Exchange Commission (the “SEC”), including, but not limited to, the risks discussed under Item 1A “Risk Factors” and Item 7: Management’s Discussion & Analysis in AES’ 2013 Annual Report on Form 10-K and in subsequent reports filed with the SEC. Readers are encouraged to read AES’ filings to learn more about the risk factors associated with AES’ business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Any Stockholder who desires a copy of the Company’s 2013 Annual Report on Form 10-K dated on or about February 25, 2014 with the SEC may obtain a copy (excluding Exhibits) without charge by addressing a request to the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203. Exhibits also may be requested, but a charge equal to the reproduction cost thereof will be made. A copy of the Form 10-K may be obtained by visiting the Company’s website at www.aes.com.
Source: The AES Corporation
AES Investor: Ahmed Pasha, 703-682-6451
AES Media: Amy Ackerman, 703-682-6399
CDPQ Media: Maxime Chagnon, 514-847-5493
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