By Salman Siddiqui in The Express Tribune, June 15th, 2017.
KARACHI: China’s state-owned Shanghai Electric Power Company Limited has reaffirmed its commitment to go ahead with its plan of acquiring K-Electric from Dubai-based Abraaj Group, brushing aside all rumours regarding its possible retreat from the $1.77 billion business deal.
“We have received today [Wednesday] a copy of the fresh public announcement of intention for acquisition (directly or indirectly) or up to 66.40% of the voting shares of K-Electric Limited by Shanghai Electric Power Company Limited,” K-Electric Director Finance and Company Secretary Muhammad Rizwan Dalia said in a notification to the Pakistan Stock Exchange (PSX) on Wednesday.
Shanghai Electric Power had agreed to buy the majority stake of K-Electric at a price of $1.77 billion from Abraaj Group in October 2016.
The multination firm re-submitted the public announcement of intention (PoI) as the previous one lapses on June 30, currently pending due to required regulatory and other approvals.
Despite the development, K-Electric’s share price dropped almost 3% or Rs0.20 to Rs6.77 with a volume of 7.59 million shares on a bearish day at the PSX. The information regarding its commitment to go ahead with the acquisition deal is available at the stock market since Tuesday’s afternoon.
The manager to the offer Arif Habib Limited Chief Executive Officer Shahid Ali Habib told The Express Tribune the fresh submission of PoI does not deal with the acquisition price.“It [PoI] is silent on the pricing, which is part of the sales purchase agreement.”
There was information in circulation that the Chinese firm would revise down its price in the fresh PoI. The information was linked with K-Electric’s dues worth billions of rupees upon Sui Southern Gas Company and others.
Besides, the National Electric Power Regulatory Authority has significantly revised down K-Electric power tariff for end-consumers months ago, which is a negative development for the Karachi-based power firm and neutral for the end-consumers.
Following the development, Shanghai Electric Power’s (SEP) officials approached Prime Minister Nawaz Sharif for review of the revised down tariff and since then there is complete silence on the issue. The silence had given birth to the rumours of SEP back out.
K-Electric is an integrated power generation, distribution and transmission firm. It has exclusive distribution rights for Karachi and its adjoining areas, serving some 2.5 million consumers.
The Abraaj Group owned 66.4% stake in K-Electric via its parent company, KES Power. The power firm was privatised in 2005. The venture capital group took the majority stake in 2009 through its funds. https://tribune.com.pk/story/1435848/shanghai-electric-reaffirms-commitment-acquire-ke/
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