Kapco intends to buy 17.37 percent stake in Hubco

KARACHI: Kot Addu Power Company Limited (Kapco) has expressed intention to acquire 17.37 percent shareholding in Hub Power Company (Hubco) being offered by Dawood Hercules Corporation Limited (DHCL) and other shareholders.

In a notice to the local bourse on Friday, Kapco informed that pursuant to board’s approval, Kapco has executed share purchase agreements for acquisition of the shares and intends to also arrange debt financing for the acquisition.

“The purchase price is Rs109.86/share with a cumulative purchase price of Rs22.09 billion. Completion of the transaction remains conditional on required corporate and regulatory approvals,” the bourse filing added.

Following the announcement, Hubco’s share slipped 0.4 percent while Kapco’s share closed down 0.5 percent. In July this year, DHCL had announced to sell its entire 14.91 percent stake and transfer the management control of Pakistan’s largest independent power producer Hubco to a strategic buyer.

DHCL is an investment holding company with diversified holdings in energy and foods. Company investments include a 37 percent ownership of associated company Engro Corporation Limited and a 14 percent stake in the Hubco.

In 2012, DHCL and its affiliates collectively acquired 16.42 percent stake comprising 190 million shares in Hubco following the divestment of its 17.44 percent shareholding in Hubco by National Power International Holdings BV. Hubco has a combined power generation capacity of over 1,600MW. The company’s RFO-fired thermal plant, situated at Mouza Kund, Hub in Baluchistan, supplies net 1,200MW of reliable and uninterrupted electricity to the national grid. Its Narowal Plant is an RFO-fired, engine-based, combined cycle power station, located at Mouza Poong, Narowal in Punjab. Additionally, the company holds 75 percent controlling interest in Laraib Energy Limited which owns and operates a run-off-the-river hydropower plant near the New Bong Escape, downstream of Mangla Dam in Azad Jammu and Kashmir.

To launch new initiatives, the company has formed wholly-owned subsidiaries. For investing in the imported coal-based 1,320MW power project and other future growth initiatives, the company has incorporated Hub Power Holdings Limited (HPHL). Hub Power Services Limited (HPSL), a wholly owned subsidiary, has been incorporated to manage O&M of its existing power assets, its future projects and explore onshore and offshore O&M business opportunities.

To set up a 330MW mine mouth coal power Plant at Thar Coal Block II Sindh, the company has established Thar Energy Limited, as a wholly-owned subsidiary of Hub Power Co Ltd. To undertake the imported coal-based power project through HPHL, the company has set up China Power Hub Generation Company (CPHGC), with its joint venture partner China Power International Holdings (CPIH). The company is also investing $20 million in Sindh Engro Coal Mining Company (SECMC), a joint venture between Hubco, Engro, Thal Limited, HBL, CMEC, and government of Sindh, to develop a coal mine at Thar which has the seventh largest reserve of coal in the world.