Shanghai Electric Power Company Limited (“SEP”), the listed subsidiary of State Power Investment Corporation (SPIC) and the Abraaj Group (“Abraaj”), signed the agreement on the purchase of 66.4% stake of the Pakistan-based K-Electric Limited (“KE”) in Beijing lately. The signing of this agreement marks a significant milestone in SEP’s acquisition of KE.

Karachi is Pakistan’s largest economic center. KE is the key power supplier to Karachi and the surrounding regions and also Pakistan’s only vertically-integrated power company engaged in generation, transmission and distribution. Operating five power plants with a total installed capacity of 2,243 MW, KE has 69 grid stations and 21,817 sub-stations, with 2.5 million customers and a coverage area of 6,500 km². In 2015, KE’s peak load reached 3,200 MW.

KE was established in 1913 and is a listed company in Pakistan. Abraaj is KE’s controlling shareholder. As of the end of FY2015, KE has total assets of USD 3.6 bn and recorded revenues of USD 1.88 bn and net profits of USD 280 mn for FY2015.

Over the course of the KE transaction, SPIC conducted various workshops on the feasibility of the transaction. Mr. Wang Binghua, Chairman of SPIC, met with Mr. Arif Naqvi, founder and CEO of Abraaj, in Beijing to discuss the transaction and further co-operation between the two parties, and he also traveled to Pakistan to meet with the local high-level government officials and conducted site visits to KE facilities. SEP organized multiple trips to Pakistan with a number of professional due diligence teams to performed detailed due diligence on KE in an all-round manner and had in-depth discussions with KE management.

The transaction has gone through the corporate decision-making procedures and will complete after regulatory approvals are obtained in both countries.

SEP’s acquisition of KE is in line with China’s “Belt and Road” Initiative. It is a significant move by SEP to implement SPIC’s strategy of international development and a solid step in realizing “Corner Overtaking”. The transaction will also contribute significantly to the China–Pakistan Economic Corridor.