US investor injects $3.7bn into RWE's stake of German TSO Amprion

RWE and US asset manager Apollo Global Management have formed a long-term partnership to secure the German utility’s funding of its stake in German transmission system operator (TSO) Amprion.

As part of the agreement, Apollo will pay €3.2bn ($3.7bn) to RWE in exchange for an equity stake in a newly established joint venture that will hold RWE’s 25.1% stake in Amprion.

RWE will receive the funds upfront and will subsequently reinvest the proceeds into the TSO through the JV as required to support its grid expansion programme.

Dividends will, in exchange, be shared between RWE and Apollo.

Amprion is one of Germany’s four TSOs, serving about 29 million people. The company plans to significantly expand its grid over the next decade, which is key for Germany’s energy transition.

RWE said its stake in the TSO in recent years has been an attractive investment due to its stable returns from a regulated asset base.

“Based on confidence that future investments will continue to yield attractive and appropriate returns for equity investors, the partnership of RWE and Apollo ensures that the required equity capital for its 25.1% stake is available to support Amprion’s major investment programme over the next decade,” RWE said in a statement.

“At the same time, this partnership aligns with RWE’s strategy to grow its generation portfolio of renewables, batteries, and flexible generation assets and to focus on its core activities of power generation and energy trading.”

RWE will keep operational control of the JV and continue to manage the Amprion stake while consolidating the JV in its financial statements.

The transaction is expected to close in the fourth quarter of this year.