State-backed Shanghai Electric Power is seeking a stake in K-Electric, the $US2.3 billion Pakistani utility, in what could become its largest overseas deal.
The Chinese company is doing preliminary work on acquiring a stake in K-Electric and hasn’t decided how much it will buy, it said in a Shanghai exchange filing on Monday. Shanghai Electric Power isn’t the only company competing in the auction, so there’s no certainty it will succeed, according to the filing.
Shanghai Electric Power is vying with Chinese clean-energy group Golden Concord Holdings for control of K-Electric, which has also drawn interest from Engie SA and at least one investment fund, people with knowledge of the matter said. Bidders were asked to submit binding offers by the end of this month for Abraaj Group’s 66 per cent holding in the Pakistani company, according to the people.
Any transaction would add to the $129 billion of utility deals announced globally this year, up from $60 billion during the same period in 2015, data compiled by Bloomberg show. K-Electric, formerly known as Karachi Electric Supply, serves more than 2.2 million customers in and around the Pakistani city and employs about 11,000 people, according to its website.
K-Electric said last week the company hadn’t been notified of any transaction or acquisition. Spokesmen for Abraaj Group and Engie declined to comment, while a representative at Golden Concord didn’t answer phone calls seeking comment.
Acquiring control of K-Electric would be Shanghai Electric Power’s biggest overseas purchase, surpassing its 2014 deal to buy a $399 million stake in Maltese utility Enemalta, according to data compiled by Bloomberg. Abraaj Group’s stake in K-Electric was valued at about $1.5 billion based on the company’s stock price Friday in Karachi.
Pakistan’s government owns another 24 per cent stake in K-Electric, the Bloomberg-compiled data show. Abraaj Group, an emerging markets investment firm with about $9.5 billion of assets under management, bought the controlling stake in K-Electric in 2009, according to its website.