Engro Energy strikes Rs34.75 billion deal, offloads thermal power to Liberty consortium

Karachi: Engro Energy Limited (EEL), a wholly owned subsidiary of Engro Corporation Limited, on Thursday announced definitive agreements with iberty Power Holding (Pvt.) Limited and a consortium for the divestment of its thermal power assets, in a deal worth Rs34.75 billion.

The consortium comprises Liberty Mills Limited, Soorty Enterprises, and Procon Engineering through Master Group of Industries. The sale of thermal assets is part of Engro’s ongoing efforts to streamline and optimise capital and resource allocation.

The agreement has been signed for the sale of Engro Energy’s entire (a) 68.9 percent shareholding in Engro Powergen Qadirpur Limited (EPQL), (b) 50.1 percent shareholding in Engro Powergen Thar (Private) Limited (EPTL), and (c) 11.9 percent shareholding in Sindh Engro Coal Mining Company Limited (SECMC)," the company said in a notice to the Pakistan Stock Exchange (PSX).

“The transaction value of each of EEL’s shareholdings is: (1) EPTL: Rs21.04 billion (2) SECMC: Rs6.21 billion and (3) EPQL: Rs7.5 billion, in each case, subject to certain adjustments as agreed in the definitive agreements. Completion of the transaction is subject to the agreed conditions, including receipt of corporate/regulatory approvals and lender consent.” Engro entered the energy vertical in 2008 by establishing Engro Powergen Qadirpur Ltd, a power asset that utilized flare gas, to help solve the unprecedented energy crisis faced by Pakistan. The group has continued to achieve significant milestones in the energy sector, includingunearthing Thar coal and subsequent Mine expansions under SECMC, and setting up two 330 MW EPTL power plants.

"These energy assets are consistently ranked amongst the most efficient, reliable, and compliant in terms of global safety and environmental standards," the company said in a statement. "Through its projects, Engro Energy has helped illuminate 9 million lives every year and enabled net import substitution of around $1.5 billion since inception."

Ghias Khan, president & CEO of Engro Corporation said he SPA with Liberty opens exciting opportunities for growth, innovation, and continued success for both people and businesses. "While we take great pride in our contributions in the energy space, it is important that we constantly re-evaluate our business portfolio and optimise it to ensure that we remain focused on helping solve the most pressing issues of our time."

Brokerage Topline Securities in a report said the cost of these thermal assets on the books of Engro Energy is estimated to be around Rs13-15 billion. Therefore, after selling its assets, Engro Energy will record a before-tax gain of around Rs20 billion.

“We believe regulatory approval and other processes will take at least 6-9 months to conclude this deal,” the brokerage said. “Assuming no major projects, we believe that ENGRO will pay a one-time special dividend of Rs45/share in 2025. This will take** the total dividend to Rs91/share in 2025.”