Cayman Island August 18 2023: Minority shareholders in an offshore holding company that owns most of Pakistani utility K-Electric have been ordered to withdraw their petition in a Pakistani court that blocked main shareholder IGCF from joining the board, IGCF said on Friday.
Infrastructure and Growth Capital Fund SPV21 (IGCF) told Reuters it had filed a case against the petition in a court in the Cayman Islands and received a positive judgment. Reuters was not immediately able to verify the court ruling.
K-Electric’s (KE) (KELE.PSX) holding structure has widely been considered an impediment to its acquisition by China’s state-owned Shanghai Electric, a deal that has been delayed for years by regulatory and legal hurdles in Pakistan.
According to a court document provided by IGCF, The Grand Court of the Cayman Islands ordered the minority shareholders to “terminate” or discontinue their proceedings in the High Court of Sindh (SHC) against the majority shareholder, which prevented IGCF from appointing its nominees to KE’s board of directors.
IGCF owns a 53.8% shareholding in Cayman Island-registered KES Power Limited (KESP), which in turn owns 66.4% of KE.
In October 2022, a high court in Pakistan’s Sindh province, of which Karachi is the capital, issued a stay order preventing any change in KE’s board of directors because of a lawsuit filed by minority shareholders in KESP. There are three vacant slots on the board of directors.
“We trust that this order will clear any doubts that had been created by the SHC stay order as to the rights of IGCF to appoint their nominees to KE’s Board. And for all stakeholders to focus on delivering affordable and reliable electricity to Karachi,” IGCF said in a statement.
The minority shareholders in KESP – Saudi- and Kuwait-based companies Al-Jomiah power limited and Denham Investment – did not immediately respond to a request for comment. KE declined to comment.
KE is the only electricity generator, transmitter, and distributor for Karachi, Pakistan’s largest city, and its adjoining areas, and the only listed electricity supplier in Pakistan. It was privatised in 2005, and has a market capitalisation of 53 billion rupees ($195 million).
IGFC was previously owned by the now defunct Abraaj Group. It was bought in 2022 by AsiaPak Investments, a private investment firm with operational assets in Pakistan and Hong Kong.
In July, IGCF also initiated legal proceedings to seek direct ownership of a stake in KE by dissolving KESP.
IGCF declined to comment directly on whether it backed Shanghai Electric’s long-stalled bid for KE.
“We are supportive of any effort that leads to affordable electricity for Karachi and opposed to any transaction that leads to increasing the suffering of Karachi’s consumers,” it said.
In June, Shanghai Electric reiterated its commitment to the deal, which was worth approximately $1.77 billion in 2016 but may change. The government of Pakistan owns 24.4% of KE.
