Shanghai Electric Power qualified as lead bidder to majority stake in KE

KARACHI: Chinese government-owned Shanghai Electric Power Co has been qualified as the final bidder of the controlling stake worth an estimated $1.6 billion in the Pakistan’s integrated electricity company K-Electric, a well-placed source told The News on Thursday.

“Shanghai Electric Power has been finalised as the buyer,” the source, privy to the development, said. “[However], the price is yet to be concluded and it will take another 10 days before the final announcement is made.” 

He said there will not be a reversal to other contenders in case of a pricing discord during the due diligence process. “Price negotiation is not an issue,” he confided with the scribe. 

Bloomberg said Shanghai Electric Power submitted the highest bid for buyout firm Abraaj Group’s 66 percent stake. 

“A deal could be announced in the coming weeks, though no final agreement has been reached and the parties are still negotiating final terms,” it said, citing the people familiar with the matter.

On Thursday, K-Electric shares rose 0.32 percent to Rs9.12 with a trading volume of 50 million shares plus, highest among all the listed power generation and distribution companies. The benchmark 100-share Index of the Pakistan Stock Exchange surged almost a percent.

At least four investors, including Shanghai Electric Power, Chinese Golden Concord Holdings Ltd and French Engie SA had expressed their interest to acquire shareholdings in the $2.4 billion Karachi-based power utility from the Dubai-based venture capital Abraaj Group. 

Lead manager to the offer Arif Habib Limited, in a notice issued to the PSX on 30 August, said Shanghai Electric Power intended to acquire up to 18.335 billion ordinary shares, 66 percent of the total number of issued shares, of K-Electric from KES Power. 

In 2008, Abraaj bought a controlling stake in KES Power, the majority shareholder in K-Electric against $361 million, the company said in an online brochure. The government also holds 24.4 percent in the power utility.

K-Electric, formerly known as Karachi Electric Supply Company Limited, supplies electricity to more than 2.2 million domestic, commercial and industrial consumers in and around the city. It employs nearly 11,000 people, according to its website.

The company posted a profit of Rs2.6 billion in 2011/12 for the first time in 17 years. It registered net losses of Rs15.5 billion in 2008/09.  It halved the transmission losses to 2.23 percent during the period.

Shanghai Electric Power is one of the major listed companies of China Power Investment Corporation, and one of the most important electric energy companies in Shanghai, said the company on its website. It had an installed capacity as 7.1619 million kilowatts by end of first half year of 2013.