Fortis on April 20 said it has reached an agreement with GIC Private Limited (GIC), Singapore’s sovereign wealth fund, for GIC to acquire a 19.9% equity interest in ITC Holdings (NYSE:ITC) for aggregate consideration of about $1.23bn in cash upon closing of Fortis’ planned acquisition of ITC.
The deal with GIC, a private company owned by the government of Singapore, marks a significant component for Fortis’ financing of the ITC transaction, which was announced on Feb. 9, Fortis said in an April 20 statement.
Fortis and ITC in February said that Fortis would acquire ITC in a deal valued at $11.3bn, subject to shareholder approvals and state and other regulatory approvals. When the deal was announced, Fortis said it would seek a minority investor in ITC to aid in financing of the transaction, which is expected to close by the end of the year.
There were “many, many interested parties” looking to become minority investors during the broad and robust solicitation of investors, a source close to the deal told TransmissionHub April 20.
Fortis President and CEO Barry Perry made similar remarks during a Feb. 18 conference call on 4Q15 earnings, indicating that Fortis received “a great deal of inbound interest” in the minority stake in ITC, and that Fortis expected to secure a minority owner within 90 days.
Financing for the cash portion of Fortis’ acquisition will be achieved primarily through the minority investment sale to GIC, as well as through the issuance of about $2bn of Fortis debt, Fortis said in the April 20 statement.
On its website, GIC notes that although it is owned by the Singapore government and manages the government’s financial reserves, its relationship is like that of a fund manager for a client. The government neither interferes nor directs any GIC investment decisions, and “we operate, invest and measure our performance in the same way as any global fund management company,” GIC explained. The company has more than $100bn in assets under its management, GIC said.
GIC shares Fortis’ vision for ITC, and it “is astute and thoughtful, with a proven track record in North American infrastructure investing,” Perry said in the April 20 statement.
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,” added Joseph Welch, president, CEO and chairman of ITC.
The high quality transmission platform of ITC, combined with the strength of Fortis’ management team made an attractive opportunity for GIC to partner with Fortis to invest in ITC, added Rhys Evenden, head of infrastructure for North America at GIC.
Upon closing of the acquisition, GIC will be granted certain customary minority rights in connection with its investment in ITC, Fortis said. Additional details will be contained in regulatory filings that Fortis will make with the U.S. Securities and Exchange Commission in the coming days, said Fortis, which is based in St. John’s Newfoundland and Labrador.
The deal would combine the U.S. and Canadian utility assets of Fortis with the transmission asset business of ITC, which is based in Novi, Mich. ITC’s management team will remain in place and all ITC employees will be retained, with ITC keeping its headquarters and operations control in Novi, the companies said when the deal was announced.
ITC shareholders would own about 27% of Fortis’ common shares once the transaction is closed, the companies said.
Fortis shares currently are traded on the Toronto Stock Exchange (TSX), and it expects to list shares on the NYSE by the middle of the year, Perry said during the Feb. 18 earnings call.