Singapore based sovereign wealth fund GIC has signed an agreement with North American electric and gas utility Fortis to acquire 19.9% stake in independent transmission utility ITC for $1.228bn.
The agreement follows a deal signed by Fortis in February 2016 to acquire ITC for approximately $11.3bn in a bid to strengthen its operations in regulated power markets.
GIC North America infrastructure head Rhys Evenden said: "Given the high quality transmission platform ITC offers, the strength of the Fortis management team, and GIC’s long-term approach to infrastructure investing, we look forward to a successful transaction and partnership."
Fortis has completed a significant part of financing for the ITC acquisition with the signing of the latest deal.
Upon completion of the deal, certain customary minority rights will be granted to GIC in connection with its investment in ITC.
Fortis president and CEO Barry Perry said: "We are very pleased to be partnering with GIC in the future growth and development of ITC. GIC is astute and thoughtful, with a proven track record in North American infrastructure investing."
The firm is planning to finance the cash portion of the ITC acquisition price through the minority investment sale to GIC as well as through the issuance of $2bn of Fortis debt.
The ITC acquisition form a part of Fortis’ plans to achieve 6% average annual dividend growth target through 2020.
ITC president, CEO and board chairman Joseph Welch said: "GIC will be a great investment partner for Fortis as ITC builds on its success by continuing to take advantage of the growing opportunities for transmission investment in North America."
ITCowns and operates 15,600 miles of transmission lines and facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma, US. Subject to ITC and Fortis shareholder approvals, certain regulatory and federal approvals and other customary closing conditions, the latest deal is planned to be completed by late 2016.
Image: GIC acquires 19.9% stake in independent transmission utility ITC. Photo: courtesy of GIC Private Limited.