Abraaj to exit Pakistani utility to Shanghai Electric for $1.77b

Abraaj is selling the stake in K-Electric through its KES Power unit, having first backed the company in 2009. Two existing investors, International Finance Corporation and Asian Development Bank, also have the rights to sell a combined 0.7% stake in K-Electric to SEP for $18.94 million, according to a filing.

The deal, which is subject to regulatory approvals, will be one of the largest private transactions in Pakistan. The government currently holds a 24.36% stake in K-Electric.

Formerly known as Karachi Electric Supply, K-Electric is the only publicly-traded vertically integrated power utility in Pakistan. It manages the generation, transmission and distribution of electricity to the city of Karachi and nearby areas, serving over 2.5 million consumers. K-Electric was privatized in 2005, with a view to achieving operational and financial stability. Abraaj then took a majority stake in the company.

The GP has helped K-Electric add more than 1,000 megawatts of installed generation capacity, with overall efficiency levels improving from 30.4% in 2009 to 37.4% so far this year. The company has also built 12 new grid stations, resulting in increased transmission capacity of 768 megavolt amperes.

On the back of reduced transmission and distribution losses, K-Electric recorded a profit for the first time in 17 years in 2012. Last year, the company made a profit of PKR28 billion ($4 billion) - on PKR190 billion in revenue - up from PKR13 billion in 2014.

"Over the past seven years, we have worked very closely with the management and staff at K-Electric to catalyze that potential and achieve real and tangible value for the business, its consumers, and the city of Karachi at large. This is symbolic of a successful public private partnership model where the Government of Pakistan is a core stakeholder," Arif Naqvi, founder and CEO of Abraaj, said in a statement.

Shanghai-listed SEP is mainly responsible for the power supply of Shanghai, generating 35.23 terawatt hours in 2015. Revenue came to RMB52 billion ($7.67 billion) last year, up from RMB47 billion in 2014, while net profit increased from RMB9.76 billion to RMB10.26 billion during the same period.

Abraaj has invested approximately $1.5 billion in Asia over the past decade across a range of sectors and industries, including healthcare, education, utilities, e-commerce, logistics, consumer goods, and food and beverage.

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• Topics
• Greater China
• Trade sale
• Infrastructure
• South Asia
• China
• The Abraaj Group
• Pakistan
• Exit