China's state-owned Shanghai Electric Power (SEP) has signed an agreement to acquire 66.4% stake in Pakistani utility K-Electric from Abraaj Group for $1.77bn.

In 2009, Abraaj acquired a majority stake in the vertically integrated power utility K-Electric, which was privatized in 2005.

K-Electric serves 2.5 million consumers and has exclusive distribution rights for Karachi and its adjoining areas.

Abraaj Group founder and CEO Arif Naqvi said: “Over the past seven years, we have worked very closely with the management and staff at K-Electric to catalyze that potential and achieve real and tangible value for the business, its consumers, and the city of Karachi at large.

“This is symbolic of a successful public private partnership model where the Government of Pakistan is a core stakeholder”.

Last month, several other firms including Golden Concord, French utility Engie and at least one investment fund have also placed bids to acquire the stake in K-Electric, Bloomberg reported citing people familiar with the matter.

SEP chairman Wang Yundan said: “SEP will leverage its own strengths as a strategic investor and further realize K-Electric’s potential to provide better services to the people of Pakistan and the Government of Pakistan.

“The K-Electric transaction only marks the beginning of SEP’s cooperation with Abraaj and we look forward to further collaboration between the two parties in many other areas in the future.”

The transaction is subject to customary closing conditions and receiving necessary regulatory approvals.

SEP, a subsidiary of the State Power Investment Corporation of China, is mainly responsible for the power supply of Shanghai, with generation of 35.23 TWh in 2015. 

Image: Power utility K-Electric serves 2.5 million consumers in and around Karachi, Pakistan. Photo: courtesy of Witthaya Phonsawat/