K-Electric’s major controlling share sold to offshore BVI company

LONDON: The Karachi Electric (KE) has confirmed to the Pakistan Stock Exchange (PSE) that a large part of the controlling stake in IGFC has been acquired by Sage Venture Group Limited, a British Virgin Islands registered special purpose company.

The disclosure by KE comes after PSE wrote to the Karachi Electric seeking an explanation in relation to the potential sale of a large part of the controlling stake in Karachi Electric (KE) at the Cayman Islands Courts which was seen by this reporter after the publication of “KE’s controlling stake sale nears completion abroad, unbeknown to Pakistan” on 12 October in this paper.

Reacting to The News story, the PSE had asked the KE to “immediately disseminate” to the Exchange and Securities & Exchange Commission of Pakistan (SECP) to release “any information that may affect the market price of its shares in the manner prescribed by the exchange from time to time”.

Although the KE reacted to the above notice on Tuesday by saying that they had “not been informed of any specifics regarding the potential transaction”, it appears that the situation changed and a statement has been released to the PSE that largely confirms the facts as reported in this paper.

A document seen confidentially by this reporter says: “Further to the disclosure made by K-Electric Limited (K-Electric) on October 18, 2022, K-Electric has now been informed that changes have been consummated involving IGCF General Partner Limited (IGCF GP), being the fund manager, and the Infrastructure and Growth Capital Fund L.P. (Fund), being the owner of the Fund assets. In particular, controlling interests in IGCF GP and certain limited partnership interests in the Fund have been acquired by Sage Venture Group Limited, a British Virgin Islands registered special purpose company wholly owned by AsiaPak Investments Limited. The Fund’s indirect non-controlling shareholding in K-Electric however remains unchanged.”

The document adds: “The Fund is a Cayman Islands registered private investment fund with numerous institutional investors that is managed by the IGCF GP and holds multiple assets, including an indirect non-controlling shareholding in K-Electric. Further, for the sake of clarity, the Fund does not have a controlling interest in K-Electric nor a controlling position on the K-Electric Board of Directors.

“K-Electric has also been informed that KES Power Limited, direct majority shareholder of K-Electric, has decided to make certain changes to its nominee directors on the K-Electric Board.”

This reporter has also learnt that Justice Segal in the Cayman Courts sanctioned the actions of Deloitte to sell certain assets of Abraaj Investment Management (in Liquidation) that pertain to KE on October 13 just after this story was highlighted in Pakistan in The News and Daily Jang.

However, the document released to the PSE adds: “The Fund does not have a controlling interest in K-Electric nor a controlling position on the K-Electric Board of Directors. “K-Electric has also been informed that KES Power Limited, direct majority shareholder of K-Electric, has decided to make certain changes to its nominee directors on the K-Electric Board.” If the now-defunct Abraaj had a controlling interest in KES Power and appointed the majority of directors in KE, then whoever steps into their effective shoes will also have control over KE.

The News had previously revealed that the sale of a large part of the controlling stake in KE held by KES Power outside Pakistan had appeared to be at advanced stages, awaiting approval from a Cayman Islands court but the Government of Pakistan was not aware of the deal due to secrecy and the stake was being acquired by a recently incorporated entity called Sage Ventures Limited formed in an offshore tax haven. Further information available with this reporter shows that Mark Skelton played a key role in the whole process.

Mark Skelton didn’t respond to detailed questions by this reporter but sources in KE informed that he was apparently the representative of Alvarez and Marsal (A&M) as the Administrator of Infrastructure and Growth Capital Fund (IGCF). He is also the Chairman of both KES Power in Cayman Islands which owns the controlling stake in the KE and recently also became chairman of the KE itself, a listed national strategic asset of Pakistan.

Very credible investor sources have shown documentation to this reporter that show that Mark Skelton first wrote to IGCF investors on July 4, 2022, who invested their capital into IGCF 15 years ago and have been patiently waiting for a return of their capital. The letter was sent only to certain investors selectively, and said that “the IGCF General Partner Limited (IGCF GP) has received a notice from Sage Venture Limited (Sage) of their intention to submit a proposal (the Proposal) for the acquisition of at least Fifty Percent (50%) of the Limited Partnership interests”.

He added: “Due to the history of IGCF and its unique circumstances the IGCF GP views the Proposal as potentially attractive to those LPs desiring immediate liquidity.” In this letter, he also confirms that “Sage has entered into an agreement with Abraaj Investment Management Limited (In Official liquidation) (AIML) to acquire AIML’s assets and interests related to IGCF, including its majority, controlling stake in the IGCF GP (GP Interests), which is a condition to completing the Transaction.”

The source said that this proves that Deloitte were also a part of the transaction as well since they are the official liquidators of the AIML. In an appendix to that letter, available with this reporter, Mark Skelton highlighted developments in Pakistan from a political, currency and economic perspective in a very unfavourable light in what seems like an attempt to influence the recipients of the letter to accept the Sage offer.