Abraaj sells stake in Pakistan's K-Electric to Chinese utility

Abraaj Group has agreed to sell its stake in Pakistan’s largest power utility for US$1.77 billion to Shanghai Electric Power (SEP) as the Chinese utility moves to increase its overseas assets.

SEP will acquire a 66.4 per cent stake in K-Electric, formerly Karachi Electric Supply Company, marking one of the largest private sector transactions in Pakistan, Abraaj said.

The buyout firm based in Dubai invested in K-Electric seven years ago to increase power generation in Pakistan’s largest city.

The utility added more than 1 gigawatt of installed generation capacity during that time, and recorded its first net profit in 17 years in 2012.

K-Electric reported a 40 per cent increase in net profit for the nine months ending in March compared to the same period last year.

The utility reaches a quarter of the 9.33 million people in Karachi, and is continuing efforts to expand its reach including the 1.32GW Bin Qasim Coal Power Plant, which is expected to be completed in 2018.

“Abraaj fully recognised the outstanding growth opportunity that K-Electric represented for the power sector in Pakistan when we made our investment in 2009,” said Arif Naqvi, founder and group chief executive of Abraaj. He added that the private equity firm would remain focused on other investment opportunities in Pakistan and wider Asia.

For SEP, a unit of Fortune 500 company State Power Investment Corporation, its aim is to increase assets abroad. SEP said on its website that its strategy was to expand in the overseas market gradually.

“The power station service business has initiatively implemented the strategy of ‘going abroad’ on the basis of serving the domestic market,” the company said pointing to operations in Equatorial Guinea, Iraq and Turkey.

“SEP will leverage its own strengths as a strategic investor and further realise K-Electric’s potential to provide better services to the people of Pakistan and the government of Pakistan,” said Wang Yundan, the chairman of SEP.

“The K-Electric transaction only marks the beginning of SEP’s cooperation with Abraaj and we look forward to further collaboration between the two parties in many other areas in the future.”​


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