Singaporean sovereign wealth fund GIC has signed an agreement with New York-listed Duke Energy to acquire a 19.9% stake in Duke Energy Indiana (DEI). Under the terms of the January 28 deal, GIC will acquire the indirect minority interest in DEI for US$2.05 billion.

Duke Energy, based in Charlotte, North Carolina, is one of the largest energy holding companies in the United States. It has an electric generating capacity of 51,000 megawatts through its regulated utilities and 2,300MW through its non-regulated Duke Energy Renewables unit.

GIC will invest in a newly-formed intermediate holding company, of which DEI will be a wholly owned subsidiary. Duke Energy will remain the majority owner of DEI, with an 80.1% share.

“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," says Ang Eng Seng, GIC’s chief investment officer of infrastructure. "This capital will help create long-term value by directly supporting Duke Energy’s ability to capitalize on their stated ESG and decarbonization goals.”

The transaction is subject to customary closing conditions, including approval from the Federal Energy Regulatory Commission (FERC) and completion of review by the Committee on Foreign Investment in the United States (CFIUS).

JP Morgan Securities served as Duke Energy's lead financial adviser, and Centerview Partners also served as a financial adviser. Skadden Arps was Duke Energy’s legal adviser.

Barclays served as GIC’s exclusive financial adviser. Sidley Austin served as GIC’s lead legal adviser, alongside Steptoe & Johnson and Ice Miller.

The cash will be paid in two equal installments. The first closing is expected to occur in the second quarter of 2021. Under the terms of the agreement, Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023.