21st Century Business Herald: SEP to Pay $1.77 Billion for Controlling Stake in Pakistan K-Electric

Dubai-based Abraaj Group announced on October 31 that it had entered into a definitive agreement with Shanghai Electric Power Co., Ltd. (SEP) to sell its 66.4 percent stake in Pakistan's K-Electric (KE) through its KES Power unit for USD 1.77 billion (equivalent of RMB 12.04 billion). When completed, the deal will be one of the largest private sector transactions in Pakistan.

Founded in 1913, KE is a publicly listed fully integrated power utility involved in generation, transmission and distribution. It was privatized in 2005 and Abraaj took a majority stake in 2009 through its funds. KE has exclusive distribution rights for Karachi and its adjoining areas, serving 2.5 million consumers. KE is also the sole power supplier to Karachi, Pakistan’s largest economic center with a population of more than 20 million. Abraaj made the KE investment on account of positive expectations on booming electricity industry in Pakistan, favorable policies in the local area and friendly investment environment to encourage private-sector participation.

Operating five power plants with a total installed capacity of 2,243 MW, KE has 69 grid stations and 21,817 sub-stations, with 2.5 million customers and a coverage area of 6,500 km2. In 2015, KE’s peak load reached 3,200 MW. As of the end of FY2015, KE had total assets of USD 3.6 billion and recorded revenue of USD 1.88 billion and net profit of USD 280 million for FY2015.

The transaction has gone through the corporate decision-making procedures and will be completed after regulatory approvals are obtained in both countries.

SEP is a state-owned enterprise controlled by State Power Investment Corporation, a Fortune 500 company. Listed on the Shanghai Stock Exchange, it is mainly responsible for the power supply of Shanghai, with an annual power production of 35.23 TWh in 2015.

The Abraaj Group, established under the approval of and subject to the regulation of Dubai Financial Services Authority (DFSA), manages some USD 10 billion worth of assets and has launched 80 investment projects successfully, with total returns of USD 6.3 billion. The funds managed by Abraaj invest more than 170 projects in total, covering a wide array of sectors including consumption, energy, finance, healthcare, utility, etc.

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