KARACHI: K-Electric on Monday announced the closure of Rs25 billion worth of shariah-compliant bonds, the country’s largest private sector issue in the capital market.
“With oversubscription of IPO portion of sukuk by almost 2.5 times, the power utility was able to close the sukuk subscription on 3rd August 2020, more than two weeks ahead of schedule,” KE said in a statement. “This is testament to the continued investor confidence in K-Electric’s robust investment plan.”
Out of the targeted Rs25 billion, KE had earlier raised Rs23.7 billion via a pre-initial public offering (IPO). The remaining amount of Rs1.3 billion was offered through IPO to the general public, with a minimum subscription of Rs5,000 per certificate.
The certificate has a seven year tenor, inclusive of a two-year grace period. Listed on the Pakistan Stock Exchange, the Sukuk will provide a trading platform for investors during the life of the instrument, with Arif Habib Limited acting as the market maker and consultant to the Issue.
The structure of the sukuk has been approved by an independent shariah advisory board. Habib Bank Limited and National Bank of Pakistan are the structuring agents for the Issue. KE has previously launched four sukuk issues. It raised Rs22 billion from sukuk to refinance debt and fund future investments in 2015.
KE said the sukuk issue will also contribute towards the increased use of shariah-compliant financial instruments in Pakistan’s capital markets. KE had unveiled the fund raising plan in December last or earlier this year. But, like other businesses the utility also put strategic execution on hold.
The utility has an ambitious investment plan under which $2 billion would be spent across the city’s energy value chain over the next 3 years, including establishment of a 900MW RLNG-fired power plant and downstream transmission and distribution upgrades.
“Supported by timely regulatory and governmental approvals, these investments will shift Karachi into a power surplus position through the addition of close to 2,100 MW additional power supply by 2023,” KE said in the statement. KE is majorly owned and managed by Dubai-based Abraaj Group. The utility’s selloff deal with China has been awaiting approval from authorities for last four years.
The company said it has so far invested more than $2.1 billion in infrastructure upgrades across the energy value chain in nine years. KE serves more than 2.5 million customers across Karachi, Dhabeji and Gharo in Sindh, and Uthal, Vinder and Bela in Balochistan. It generates electricity from its own power generation units with installed capacity of 2,267 megawatts. In addition, the utility has arrangements with external power producers for around 1,360MW, including 800MW from the grid.