KARACHI, Pakistan, July 11 (Reuters) – Majority shareholders of an offshore holding company that owns most of Pakistani power company K-Electric said on Wednesday they have launched legal proceedings to seek direct ownership of a stake in the utility. .
The utility’s ownership structure has been widely seen as an impediment to its takeover by Chinese state-owned Shanghai Electric, a deal that has persisted for years due to regulatory and legal hurdles in Pakistan.
The SPV21 Infrastructure and Growth Capital Fund (IGCF), which has a 53.8% stake in KES Power Limited (KESP), registered in the Cayman Islands and which in turn owns 66.4% of K-Electric He told Reuters he had requested a fair and just settlement. Up from KESP in the Grand Court of the Cayman Islands on Tuesday.
“With this action, SPV 21 IGCF is simply looking to own its shares in KE directly rather than through a holding company in the form of KESP which has unfortunately outgrown its original purpose due to continued negative actions by minority shareholders. of KESP,” IGCF said in a statement. statement to Reuters.
Sadia Dada, K-Electric’s director of marketing and communications, said the utility was “not aware of the content of the petition or in a position to comment.”
The remaining shareholders of KES Power Limited, Saudi Arabia and Kuwait-based companies Al-Jomiah power limited and Denham Investment, did not respond to a Reuters request for comment.
K-Electric is the only generator, transmitter and distributor of electricity for Karachi, Pakistan’s largest city, and its adjacent areas, and the only publicly listed electricity provider in Pakistan. It was privatized in 2005, with a current market capitalization of Rs 53 billion ($195.03 million).
IGFC was owned by the now-defunct Abraaj Group and changed hands in 2022 when it was acquired by AsiaPak Investments, a private investment firm with operating assets in Pakistan and Hong Kong.
In October 2022, a high court in the Pakistani province of Sindh, of which Karachi is the capital, issued a stay order preventing any changes to the current board of directors due to a lawsuit brought by minority shareholders of KESP. There are three vacancies on the board of directors.
If KESP is dissolved, it may also support the acquirer’s ability to appoint directors through a direct equity stake in K-Electric, which would bring more clarity to the Shanghai Electric deal.
Shanghai Electric has been in talks to acquire a stake in KE for more than half a decade, delayed due to regulatory approval and liquidity squeezes as a result of mounting circular debt plaguing the country’s power sector. The Pakistani government owns a 24.4% stake in K-Electric.
In June, Shanghai Electric reiterated its commitment to the deal, which in 2016 was worth about $1.77 billion but is subject to change.
“We are not repudiating the Shanghai contract nor do we intend to do so by winding up KESP,” Darin Baur, IGCF director and one of the initial nominees for the vacant KE board seat, told Reuters.
($1 = 271.7500 Pakistani rupees)
Reporting by Ariba Shahid in Karachi Editing by Peter Graff
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