GIC acquires minority stake in US power giant

It buys 19.9% of transmission firm ITC for $1.6b - the latest in a series of big North American acquisitions

Sovereign wealth fund GIC has acquired a 19.9 per cent stake in US electricity transmission giant ITC Holdings for US$1.22 billion (S$1.6 billion).

The major deal is the latest in a string of significant acquisitions by GIC in North America.

Michigan-based ITC is the largest independent electric transmission company in the United States. It transmits electricity from power plants to local electricity distribution facilities in cities.

GIC bought the stake from Canadian utility giant Fortis.

The agreement released yesterday followed Fortis' announcement in February that it had acquired all of ITC, in a transaction for about US$11.3 billion.

Sovereign wealth fund GIC bought the minority stake from Canadian utility giant Fortis, which had acquired all of ITC for US$11.3 billion (S$15 billion) in a transaction announced in February.
Sovereign wealth fund GIC bought the minority stake from Canadian utility giant Fortis, which had acquired all of ITC for US$11.3 billion (S$15 billion) in a transaction announced in February. PHOTO: ITC

It was reported that ITC, which has a market capitalisation of US$6.67 billion (S$8.9 billion), was gaining better returns as federal regulators allow more profits on those lines than state regulators do.

"We believe this is an attractive opportunity to partner with Fortis to invest in ITC," said Mr Rhys Evenden, head of infrastructure for North America at GIC, in a statement yesterday. "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 said that its sale of the minority stake to GIC helped it to complete "a significant component of the ITC acquisition financing".

The Toronto-listed company added that it also financed the ITC acquisition, valued at US$11.3 billion, by issuing about US$2 billion worth of Fortis debt.

Fortis president and chief executive 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."

ITC's power lines are regulated by the US Federal Energy Regulatory Commission. It was reported that ITC, which has a market capitalisation of US$6.67 billion, was gaining better returns as federal regulators allow more profits on those lines than state regulators do.

ITC shares, trading on the New York Stock Exchange, rose by 0.55 per cent on Tuesday.

GIC's purchase of the ITC stake is the latest in a series of investments it has made in North America.

Earlier this month, the fund announced that it had signed an agreement with American private equity firm Silver Lake to acquire substantial equity stakes in Ancestry.com, a provider of online family history data and personal DNA testing.

GIC, which was already an investor in Ancestry, did not disclose the investment amount and its eventual equity stake.

Last year, the fund also entered a joint venture to take a 40 per cent interest in five shopping malls in various states in the US, including Texas, Arizona and California.

It also joined hands with two other investors to buy the University House Communities Group (UHC), which owns student housing properties in the US, for US$1.4 billion.

Assets in the Americas account for 43 per cent of the total portfolio, GIC reported in its full-year results last July. The fund manages well over US$100 billion of Singapore's reserves.

A version of this article appeared in the print edition of The Straits Times on April 21, 2016, with the headline 'GIC acquires minority stake in US power giant'. Print Edition | Subscribe