A view of the K-Electric head office, with solar panels at the parking area, in Karachi, Pakistan, January 24, 2023. REUTERS/Akhtar Soomro
KARACHI, Pakistan, July 11 (Reuters) – The majority shareholders of an offshore holding company that owns most of Pakistani power company K-Electric said on Wednesday they have initiated legal proceedings to seek direct ownership of a stake in the utility.
The power utility's holding structure has widely been considered an impediment to its acquisition by China's state-owned Shanghai Electric, a deal that has lingered for years due to regulatory and legal hurdles in Pakistan.
Infrastructure and Growth Capital Fund SPV21 (IGCF), which has a 53.8% shareholding in Cayman Island-registered KES Power Limited (KESP), which in turn owns 66.4% of K-Electric, told Reuters it had filed for a Just & Equitable Winding Up of KESP in the Grand Court of Cayman Islands on Tuesday.
"By this action SPV 21 IGCF simply seeks to own its shares in KE directly instead of through a holding company in the form of KESP which has unfortunately outlived its original purpose due to the continued negative actions of KESP’s minority shareholders," IGCF said in a statement to Reuters.
Sadia Dada, Chief Marketing and Communications Officer at K-Electric, said the utility was "neither privy to the contents of the petition nor in a position to comment".
The remaining shareholders of KES Power Limited, Saudi-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 electricity generator, transmitter, and distributor for Karachi, Pakistan's largest city, and its adjoining areas, and the only listed electricity supplier in Pakistan. It was privatised in 2005, with a current market capitalization of 53 billion rupees ($195.03 million).
IGFC was previously owned by the now defunct Abraaj Group, and changed hands in 2022 when AsiaPak Investments, a private investment firm with operational assets in Pakistan and Hong Kong, acquired it.
In October 2022, a high court in Pakistan's Sindh province, of which Karachi is the capital, issued a stay order preventing any change in the present board of directors because of a lawsuit filed by minority shareholders in KESP. There are three vacant slots on the board of directors.
If KESP is dissolved, it may also support the ability of the acquirer to appoint directors through a direct shareholding in K-Electric, which would provide 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 constraints as a consequence of mounting circular debt plaguing the country's power sector. The government of Pakistan owns a 24.4% stake in K-Electric.
In June, Shanghai Electric reiterated its commitment to the deal, which was worth approximately $1.77 billion in 2016 but may change.
“We are not repudiating the Shanghai contract or intending to do so by winding up KESP,” Darin Baur, a director of IGCF and one of the initial nominees for the vacant position on the KE board told Reuters.
($1 = 271.7500 Pakistani rupees)
Our Standards: The Thomson Reuters Trust Principles.
Thomson Reuters
Ariba Shahid is a journalist based in Karachi, Pakistan. She primarily covers economic and financial news from Pakistan, along with Karachi-centric stories. Ariba has previously worked at DealStreetAsia and Profit Magazine.
Medical equipment provider Steris on Tuesday raised its profit forecast for fiscal 2024 after strength in its core healthcare business boosted first-quarter results above Wall Street estimates.
Czech PPF Group said on Tuesday that Emirates Telecommunications Group Company e& would pay 2.2 billion euros up front to acquire a controlling stake in its telecoms assets in Bulgaria, Hungary, Serbia and Slovakia.
Ratings agency Fitch on Tuesday downgraded the United States' long-term foreign currency ratings to AA+ from AAA, reflecting expected fiscal deterioration over the next three years as well as a high and growing general government debt burden.
Chile's environmental regulator said Tuesday it had fined Lundin's Caserones copper mine the equivalent of $9 million for serious water-use violations.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2023 Reuters. All rights reserved

source