KARACHI--China's Shanghai Electric power company will buy a controlling stake in K-Electric, a power generation and distribution company in Pakistan's largest city, for $1.77 billion (186 billion yen), K-Electric's parent company announced in a statement on Sunday. Dubai-based Abraaj Group said it had entered into a definitive agreement with China's state-backed Shanghai Electric to divest its 66.4 percent stake in K-Electric. K-Electric serves around 2.2 million customers in and around Karachi, Pakistan's largest city with a population of about 20 million. It is involved in both generation at thermal power plants and power distribution. "Today marks a milestone in that partnership as we enter into a definitive agreement to divest our stake in a high performance business and market leader to a strategic buyer who is fully committed to continuing this success story into the future," Arif Naqvi, Abraaj's chief executive, said in a statement. When completed, the deal will be the biggest M&A agreement in Pakistan in a decade. Large parts of the Pakistani economy remain nationalized, or held by a few private businessmen, rather than diversified companies. "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," Wang Yundan, Shanghai Power's chief executive, said in a statement. Shanghai Electric announced its intention to bid for the stake in August. Chinese companies' interest in Pakistan is growing after China announced energy and infrastructure projects worth $46 billion in the South Asian nation last year, with a view to opening a trade corridor linking western China with the Arabian Sea.
China-based Shanghai Electric power company will purchase a controlling stake in K-Electric, a power generation and distribution firm in Karachi, Pakistan, for $1.77bn after Abraaj Group confirmed its divestment of its 66.4% stake in the company. Serving approximately 2.2 million people in and around the city, the company operates both thermal power generation and distribution. The deal is expected to close by end of this year, subject to regulatory approvals.