The Abraaj Group on Sunday announced that it has agreed to divest its 66.4% shareholding in K-Electric to the Shanghai Electric Power Company Limited for US$ 1.77 billion.
In a press statement, the company said that this is one of the largest private sector transactions in Pakistan and represents one of the most well-recognised operational turnaround stories.
K-Electric (formerly Karachi Electric Supply Corporation) was privatised in 2005, and Abraaj bought a majority stake in 2009 which transformed the strategic asset into a leading energy player, serving 2.3 million consumers.
The company was successful in reducing transmission and distribution losses by over 12 percentage points and recorded a net positive income for the first time in seventeen years.
Arif Naqvi, founder and Group Chief Executive, Abraaj Group said: “Today marks a milestone in that partnership as we enter into a definitive agreement to divest our stake in a high performance business and market leader to a strategic buyer who is fully committed to continuing this success story into the future.”
He said that K-Electric is symbolic of a successful public private partnership model where the government of Pakistan is a core stakeholder.
Chairman of SEP Wang Yundan said that the signing of the definitive agreement is a result of collaborative efforts Abraaj and the Shanghai Electric.
He said that they appreciate what Abraaj has achieved at K-Electric over the past seven years and recognizes the performance and capability of their management team.
“SEP will leverage its own strengths as a strategic investor and further realize K-Electric’s potential to provide better services to the people of Pakistan and the government of Pakistan,” he said.
He expressed confidence that the SEP would work together with Abraaj in the future to transform K-Electric into one of the best companies in Pakistan.
The SEP is a state-owned enterprise controlled by State Power Investment Corporation, and a Fortune 500 company listed on the Shanghai Stock Exchange.
The transaction will close once customary closing conditions and requisite regulatory approvals are obtained.