A Chinese power giant has announced its intention to buy majority shares in the sole power utility company in Pakistan’s largest city of Karachi, K-Electric, in a deal said to be the biggest private-sector acquisition in the country’s history.
The Shanghai Electric Power Company Limited made its intentions public through its managers in the Pakistan Stock Exchange. Arif Habib Limited which represents the Chinese company in the stock exchange notified the PSX yesterday about the impending deal.
Arif Habib Limited in a statement said Shanghai Electric Power Company wanted to acquire a maximum of Rupees 18.335 billion ordinary shares of K-Electric Limited which represents 66.40 per cent of the total issued share capital of the target company. The acquisition of shares by a foreign company is subject to due diligence and execution of definitive agreements.
The majority of shares in K-Electric are presently held by Abraaj Group whose headquarters are based in Hong Kong. The K-Electric has also informed the PSX through a notice that its majority shareholder was evaluating the possibility of divesting its stake in the company.
The company’s share price increased 2.4 per cent Monday, closing at Rs 9.09 per share.
The development comes at a time when the K-Electric has said it wants to upgrade its current transmission and distribution network in Karachi which is subject to frequent power breakdowns and where power theft is a major concern.
The K-Electric has said it plans to invest USD 2.2 billion to improve its capacity and distribution network. China is stepping up investment in Pakistan as part of a USD 46 billion project unveiled last year that will link its western Xinjiang province to Pakistan’s Gwadar port with a series of infrastructure, power and transport upgrades.