China’s Shanghai Electric is set to purchase $1.77 billion K-Electric stake, says Abraaj Group

The Abraaj Group has announced that China’s Shanghai Electric Power (SEP) will purchase $1.77 billion K-Electric stake. The news was publicized on Sunday (30th October 2016). According to the group, this is one of the largest private sector transactions that SEP has undertaken in the country.

A press release issued by the Abraaj Group read:

“Upon completion, this will be one of the largest private sector transactions in Pakistan. It will represent one of the global power industry’s most well-recognized operational turnaround stories”

The statement further read:

The Abraaj Group has entered into “a definitive agreement to divest its stake in K-Electric to Shanghai Power Company for $1.77bn”

Abraaj-controlled K-Electric power will divest 66.4% stake subject to regulatory approvals being obtained. Moreover, the deal has come in at a time of increased Chinese interest in investing in Pakistan as of its CPEC initiative.

While commenting on the acquisition, Chairman of SEP Wang Yundan stated:

“SEP appreciates what Abraaj has achieved at K-Electric over the past seven years. It also recognizes the performance and capability of K-Electric’s management team”

The chairman is affirmed about transforming K-Electric into one of the best companies in Pakistan. He commented:

“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. SEP is confident about working together with Abraaj in the future to transform K-Electric into one of the best companies in Pakistan”

Speaking about the exit, the Founder and Chief Executive of Abraaj Group Arif Naqvi said:

“Today marks a milestone… as we enter into a definitive agreement to divest our stake in a high-performance business as market leader to a strategic buyer who is fully committed to continuing this success story into the future”

About K-Electric and Shanghai Electric

Karachi is Pakistan’s biggest and wealthiest city. K-Electric is the country’s biggest electricity company, supplying power to 2.5 million customers in and around Karachi. Formerly known as the Karachi Electric Supply Company, K-Electic was incorporated in 1913 and is a publicly listed fully integrated power utility involved in generation, transmission and distribution. In 2005, the company was privatized with Abraaj Group taking a majority stake in 2009 through its funds.

On the other hand, Shanghai Electric Power is a subsidiary of the State Power Investment Corporation of China. SEP is engaged in generating and transmitting electricity. In addition, it also operates and maintains business in the energy service sector. SEP was among a number of Chinese bidders, including China Southern Power Grid, which were in line to acquire the stake.

Source: Dawn

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