China’s Shanghai Electric Power Company has withdrawn an offer to buy 66.4 percent stakes of K-Electric Limited.
“We have received a copy of the withdrawal of public announcement of intention for acquisition – directly or indirectly – of up to 66.4 percent of the voting shares of K-Electric Limited by Shanghai Electric Power Company,” Mohammad Rizwan Dalia, Company Secretary at K-Electric stated in a notice sent to the bourse.
Stock market cheered the news as K-Electric’s share touched a high of Rs 6.49 in the intra-day trading, and settled with a gain of 0.63 percent with a volume of 4.63 million traded shares.
Back in June, it was notified that the company had withdrawn plans to acquire shares of K-electric as the power utility company’s key shareholder failed to secure a national security clearance certificate to complete the transaction.
On August 30, 2016, Shanghai Electric made a public announcement of intention to acquire 18.335 million shares in K-Electric Limited, representing 66.4 percent of the total issued share capital.
Rajani said Shanghai Electric continued to be fully committed to consummate the transaction and, “they will make a fresh public announcement of intention to acquire stake in K-Electric immediately with effect from the expiry date of the earlier intention i.e. June 30, 2017.”
So another public announcement was made on June 29, 2017 by Shanghai Electric Power Company Limited to directly or indirectly acquire up to 66.40% of the shares of the total issued Share capital of the target Company.
After all of this, the Ministry of Defence had given a security clearance certificate for the sale of Abraaj Group’s 66.4% stake in K-Electric to Shanghai Electric Power in September 2017.
Both Ministry of Defence and Ministry of Interior had given the no-objection certificates for the sale of majority shares to the Chinese company.
Now Shangai Electric has again withdrawn the intention to acquire 66.40% of K-Electric Ltd.
Abraaj, in its statement two weeks ago, said the example set by Shanghai Electric Power, which no doubt was important for Karachi and Pakistan could fuel the government’s aim of privatizing power distribution companies in the longer run.
It also claimed that the deal will be concluded, right tariff determination by the regulator was very important as it would help in promoting an environment of encouraging investment.
Senior Associate Dabeer Hassan at Arif Habib Limited said the time period for making the public announcement of offer, after an extension by the Securities and Exchange Commission of Pakistan, would end by March 26, 2018 on the basis that, “certain regulatory and other approvals for the transaction remain outstanding.”
Abraaj Group, a Dubai-based private equity, in partnership with Al-Jomaih Group of Saudi Arabia and National Industries Group of Kuwait, holds a total shareholding of 66.4 percent in K-Electric. The three-firm consortium operates in the name of KES Power, which is the parent company of K-Electric.
K-Electric Limited engages in the generation, transmission, and distribution of electric energy in Pakistan. The company has an installed generation capacity of approximately 2,267 MW.
Shanghai Electric (Group) Corporation designs, develops, and manufactures thermal, nuclear, and wind power equipment in China.