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GIC buys minority stake in U.S. electric transmission company for $1.2b

by Andrea Waitrovich

Fortis has agreed to sell a 19.9 percent equity interest in ITC Holdings Corp. to GIC, Singapore’s sovereign wealth fund, for $1.228 billion in cash upon the closing of the acquisition.

In February 2016, Fortis announced the acquisition of ITC for $11.3 billion. With the definitive agreement to sell 19.9 percent of ITC to GIC, Fortis has completed a significant component of the ITC acquisition financing. 

ITC is an independent electric transmission company in the United States. Based in Novi, Mich., ITC invests in the electric transmission grid to improve reliability, expand access to markets, allow new generating resources to interconnect to its transmission systems, and lower the overall cost of delivered energy. Through its regulated operating subsidiaries — ITC Transmission, Michigan Electric Transmission Company, ITC Midwest and ITC Great Plains — ITC owns and operates high-voltage transmission facilities in Illinois, Iowa, Kansas, Michigan, Minnesota, Missouri and Oklahoma, serving a combined peak load exceeding 26,000 megawatts along approximately 15,700 circuit miles of transmission line. ITC's grid development focus includes growth through regulated infrastructure investment as well as domestic and international expansion through merchant and other commercial development opportunities. 

The closing of the acquisition of ITC is expected to occur in late 2016, and it is subject to ITC and Fortis shareholder approvals, certain regulatory and federal approvals, and other customary closing conditions.

GIC has been an active investor in the United States. The sovereign wealth fund sees the United States as an important source of investment opportunities, totaling 45 percent of its portfolio and representing the biggest investment destination.

For its real estate portfolio, GIC partnered with Canada Pension Plan Investment Board and The Scion Group to acquire InvenTrust Properties Corp.’s U.S. student housing platform for $2.03 billion.

GIC has an allocation of 9 percent to 13 percent of its portfolio toward real estate. In November 2015, about 7 percent was invested in the real estate segment. GIC’s private infrastructure investments are included in its private equity allocation, which is currently 11 percent to 15 percent.

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