Trystan Casey
Hawaiian Electric Industries (HEI) recently sold a 90.1% stake in its bank subsidiary, American Savings Bank (ASB), to independent investors. The deal, worth $450 million, was struck to help the company raise funds for the 2023 Maui wildfire settlement. The sale of the majority of HEI's ownership in ASB will allow the company to streamline its strategic focus on its utility business and legislative agenda in the wake of the Maui wildfires.
| Characteristics | Values |
|---|---|
| Date of the deal | 31 December 2024 |
| Stake sold by Hawaiian Electric Industries (HEI) | 90.1% |
| Stake retained by HEI | 9.9% |
| Value of the deal | $450 million |
| Amount raised | $405 million |
| Reason for the sale | To raise funds for the 2023 Maui wildfire settlement |
| Impact on HEI | HEI will no longer be subject to regulation as a savings and loan holding company |
| Impact on American Savings Bank (ASB) | ASB will become an independent, local bank headquartered in Honolulu |
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What You'll Learn
Hawaiian Electric sells 90% of American Savings Bank
Hawaiian Electric Industries (HEI) has sold a 90.1% stake in its bank subsidiary, American Savings Bank (ASB), in a deal worth $450 million. The sale was announced on 31 December 2024 and completed on 2 January 2025.
The transaction, made through a series of separate agreements, saw investors pay $405 million in cash for 90.1% of ASB's common stock. No investor now owns more than 9.9% of the bank's common stock, including HEI, which has retained a 9.9% stake.
The sale of the majority of HEI's ownership in ASB will enable the company to operate as a simplified holding company with a streamlined strategic focus on its utility, Hawaiian Electric. HEI will also be able to reduce its debt and increase flexibility in funding the $1.99 billion Maui wildfire settlement it reached in August 2023.
The sale of ASB was prompted by the Maui wildfires, which ravaged the region in 2023. The deal will allow HEI to "enhance [its] focus on the utility as we work to help our state recover from the 2023 Maui wildfires and strengthen the financial and strategic position of our company," said Scott Seu, HEI's president and CEO.
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The deal was worth worth $450 million
Hawaiian Electric Industries (HEI) has sold a 90.1% stake in its bank subsidiary, American Savings Bank (ASB), in a deal worth $450 million. The sale was made to independent investors through a series of separate agreements, with the investors purchasing 90.1% of ASB's common stock for a cash consideration of $405 million.
The transaction values ASB at $450 million and allows HEI to streamline its strategic focus on its utility business, Hawaiian Electric. By reducing its stake in ASB, HEI will no longer be subject to regulation as a savings and loan holding company. The sale also provides HEI with an opportunity to increase efficiency and reduce debt, increasing flexibility in funding key initiatives and the $1.99 billion Maui wildfire settlement reached in August 2023.
The deal closed on December 31, 2024, and ASB will continue to be led by its current management team under its existing brand and maintain its branches. The sale of the majority of HEI's ownership in ASB follows speculation about the holding company's ability to raise funds to deal with the costs associated with the Maui wildfires.
The $450 million deal represents a significant transaction for both HEI and ASB, allowing HEI to enhance its focus on its utility business and providing ASB with the opportunity to maintain its strong performance and best-in-class service for its customers in Hawaii.
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The sale was to help cover the 2023 Maui wildfire settlement
Hawaiian Electric Industries (HEI) sold a 90.1% stake in its unit American Savings Bank (ASB) in a $450 million deal. The sale was made to independent investors through a series of separate agreements, with each investor having a non-controlling interest in ASB. No investor owns more than 9.9% of the bank's common stock, including HEI, which has retained a 9.9% stake. The sale of the majority stake in ASB was intended to help cover the costs of the $1.99 billion settlement related to the 2023 Maui wildfires.
The 2023 Maui wildfires had devastating consequences, with more than 100 people losing their lives, thousands of others displaced, and homes and businesses destroyed. The settlement, reached in August 2024, addresses roughly 450 lawsuits filed in both state and federal courts by individuals, businesses, and insurance companies. The seven defendants, including Hawaiian Electric, agreed to a $4 billion global settlement to resolve claims arising from the tragedy.
The sale of the majority stake in ASB was part of HEI's efforts to raise funds and contribute to the wildfire settlement. By selling the majority stake, HEI intended to reduce holding company debt and increase flexibility in funding the settlement contributions and key utility initiatives. The sale also allows HEI to simplify its business structure and focus on its core utility business and legislative agenda.
The timing of the sale, just before the start of the Hawaii Legislature's 2025 session, was strategic and well-received by Sen. Jarrett Keohokalole, who anticipated a positive impact on the company's legislative agenda. The sale also created an independent, local bank headquartered in Honolulu, led by ASB's current management team.
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The sale allows HEI to focus on its utility business
Hawaiian Electric Industries (HEI) has sold a 90.1% stake in its bank subsidiary, American Savings Bank (ASB), in a deal worth $450 million. The sale to independent investors was announced on 31 December 2024 and completed on 2 January 2025.
The sale of ASB is intended to allow HEI to focus on its utility business. In a statement, HEI CEO Scott Seu said:
> The sale allows HEI to enhance our focus on the utility as we work to help our state recover from the 2023 Maui wildfires and strengthen the financial and strategic position of our company. We intend to use the proceeds to reduce holding company debt, increasing flexibility for how HEI funds the HEI and Hawaiian Electric wildfire settlement contributions and key utility initiatives.
The $450 million deal will help HEI to cover the costs of the $1.99 billion joint settlement it agreed to in 2023, following the Maui wildfires. The sale will also reduce the company's debt and increase its flexibility in funding key utility initiatives.
The sale of ASB also has implications for the structure of HEI. By retaining a 9.9% stake in ASB, the company will no longer be subject to regulation as a savings and loan holding company. This will allow HEI to operate as a simplified holding company with a streamlined strategic focus on its utility, Hawaiian Electric.
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No investor owns more than 9.9% of the bank's common stock
Hawaiian Electric Industries (HEI) sold a 90.1% stake in its unit American Savings Bank (ASB) on 31 December 2024. The deal, worth $450 million, saw investors purchase 90.1% of ASB common stock for $405 million. Notably, no single investor owns more than 9.9% of the bank's common stock, including HEI, which has retained a 9.9% stake.
The sale of the majority stake in ASB by HEI is aimed at raising funds for the $1.99 billion settlement related to the deadly 2023 Maui wildfire. The sale also allows HEI to streamline its strategic focus on its utility business, Hawaiian Electric, and reduce holding company debt. According to HEI's president and CEO, Scott Seu, the proceeds from the sale will enhance the company's financial flexibility in funding key utility initiatives and settlement contributions.
The restriction on any investor owning more than 9.9% of the bank's common stock is likely due to regulatory requirements. In the United States, individuals seeking to purchase bank stock face regulatory approval requirements once their ownership reaches 10 percent of the outstanding shares of any class of securities. To surpass the 10 percent threshold, individuals must complete specific regulatory procedures, including providing biographical information and demonstrating their financial capacity.
The regulatory review process for large stock purchases is designed to ensure the continued safety of the insured banking system. It involves assessing factors such as competition, convenience, and the community's credit needs to prevent the creation of a monopoly in banking markets.
By limiting the ownership stake to 9.9%, the bank and its regulators can maintain a diversified shareholder base, mitigate the risk of excessive influence by a single investor, and ensure compliance with relevant laws and regulations governing the banking industry.
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Frequently asked questions
No, Hawaiian Electric sold a 90.1% stake in its bank subsidiary American Savings Bank to independent investors in a deal worth \$450 million.
The sale was made to help the company raise funds for the \$1.99 billion 2023 Maui wildfire settlement.
American Savings Bank is now an independent, investor-owned bank with no investor owning more than 9.9% of the bank's common stock.
The sale allows Hawaiian Electric to streamline its strategic focus on its utility business and enhance its financial and strategic position.
