Key Takeaways
- • NiSource has agreed to sell a 19.9% minority stake in Northern Indiana Public Service Co. (NIPSCO) to Blackstone Infrastructure Partners for $2.15 billion, with the buyer committing an additional $250 million in capital spending for the utility.
- • The transaction values NIPSCO at approximately $10.8 billion and is slated to close in late 2023, following Federal Energy Regulatory Commission approval.
- • The deal represents a capital-raising strategy increasingly adopted by utilities—including FirstEnergy and Duke Energy—as an alternative to traditional public stock offerings to fund energy transition initiatives.
- • Consumer advocates including Public Citizen's Tyson Slocum have raised concerns about private equity board representation in utilities, citing opacity of financing structures and potential risks to consumers, workers, and climate objectives.
- • NiSource characterizes the transaction as "a highly attractive and efficient form of equity financing" to support NIPSCO's energy transition strategy.
Summary
NiSource announced on June 20, 2023, a binding agreement to sell a 19.9% stake in its subsidiary NIPSCO to an affiliate of Blackstone Infrastructure Partners for $2.15 billion. The transaction, which values NIPSCO at approximately $10.8 billion, includes a commitment from Blackstone to provide an additional $250 million in capital spending at the utility. The deal is expected to close in the fourth quarter of 2023.
This transaction reflects a broader trend among major U.S. utilities seeking alternative capital-raising mechanisms. According to Paul Patterson, equity analyst at Glenrock Associates, NiSource's approach mirrors strategies employed by FirstEnergy and Duke Energy, representing "yet another example of a utility looking to raise capital by strategically selling part of its business as opposed to having a large public stock offering." NiSource management framed the sale as particularly suited to funding the company's energy transition strategy and characterized it as an efficient form of equity financing.
However, the transaction has drawn scrutiny from consumer advocacy groups. Tyson Slocum, energy program director for Public Citizen, expressed concern about the precedent set by private equity board representation in utility governance. Slocum stated that "allowing private equity to steer management of America's utilities places consumers, workers and the climate at risk," citing the opacity of private equity financing structures relative to publicly traded companies. He argued that the "impenetrable financial structure" of private equity models is incompatible with public utility oversight and called for greater regulatory recognition of these risks by entities including the Federal Energy Regulatory Commission and Securities and Exchange Commission.
The Federal Energy Regulatory Commission subsequently approved NiSource's plan to proceed with the sale, clearing a regulatory hurdle for the transaction's completion.
This transaction reflects a broader trend among major U.S. utilities seeking alternative capital-raising mechanisms. According to Paul Patterson, equity analyst at Glenrock Associates, NiSource's approach mirrors strategies employed by FirstEnergy and Duke Energy, representing "yet another example of a utility looking to raise capital by strategically selling part of its business as opposed to having a large public stock offering." NiSource management framed the sale as particularly suited to funding the company's energy transition strategy and characterized it as an efficient form of equity financing.
However, the transaction has drawn scrutiny from consumer advocacy groups. Tyson Slocum, energy program director for Public Citizen, expressed concern about the precedent set by private equity board representation in utility governance. Slocum stated that "allowing private equity to steer management of America's utilities places consumers, workers and the climate at risk," citing the opacity of private equity financing structures relative to publicly traded companies. He argued that the "impenetrable financial structure" of private equity models is incompatible with public utility oversight and called for greater regulatory recognition of these risks by entities including the Federal Energy Regulatory Commission and Securities and Exchange Commission.
The Federal Energy Regulatory Commission subsequently approved NiSource's plan to proceed with the sale, clearing a regulatory hurdle for the transaction's completion.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.