Opponents Of The AES Deal Are Fighting The Wrong Battle

Consumer advocacy groups, led by the Private Equity Stakeholder Project, urged FERC to block the $33.4 billion acquisition of AES Corporation by Global Infrastructure Partners and EQT. They claim it's a hostile private equity takeover threatening customers. However, the article argues this "horror scenario" is unfounded for this specific deal. AES required significant capital for infrastructure expansion, a need met by this equity-funded acquisition without new debt or ratepayer cost transfers. Credit agencies maintained AES's ratings, and buyers are long-term investors. Endorsed by AES and shareholders, the deal is framed as crucial for grid modernization and reliable power for 1.1 million Indiana and Ohio customers, not predation.

Last week, the Private Equity Stakeholder Project (PESP) ran its familiar stop-the-deal playbook against AES Corporation’s pending acquisition by Global Infrastructure Partners (GIP) and EQT. Joined by consumer advocacy groups Public Citizen and Citizens Action Coalition Indiana, PESP petitioned the Federal Energy Regulatory Commission (Docket EC26-99) to block the $33.4 billion acquisition outright or force BlackRock, which owns GIP, to break up its utility holdings as a condition of approval. BlackRock, led by founder and CEO Larry Fink, always makes for an easy target to help boost activist group fundraising, but this deal should not be controversial. The opposition’s argument - that the consortium of would-be owners is attempting a hostile takeover of a captive utility monopoly in Indiana and west-central Ohio - is long on rhetoric but short on facts. Hoosiers and Ohioans who depend on AES Indiana and AES Ohio for their power deserve a clearer picture.

The private equity horror scenario pushed out by the critics is familiar enough and valid in some cases: a financial acquirer loads a target company with debt to finance the acquisition premium, engineers fees and dividends back to itself, cuts operational investment to service that debt, and exits before the damage lands on customers. That model is a legitimate concern in industries where it has actually played out. But that isn’t what’s happening in Indiana and Ohio. AES Corporation was not strong-armed into a shady deal. As I detailed in my March column, AES Board Chairman Jay Morse said as much on the day the deal was announced: the company had a significant and growing capital need to fund its infrastructure buildout beyond 2027, and without this transaction, the most likely path forward involved cutting or eliminating the dividend and issuing large amounts of new equity to dilute existing shareholders. AES has signed 11.8 gigawatts of agreements to supply major technology firms globally, and its regulated utilities in Indiana and Ohio serve 1.1 million customers between them. Building out that kind of capacity requires a scale of investment that quarterly earnings calls and dividend expectations simply cannot accommodate.