Shanghai Electric (China) has entered into a definitive agreement with Abraaj Group (United Arab Emirates) for the acquisition of Abraaj's 66.4% interest in K-Electric, a power generation and distribution company in Pakistan, for US$1.77bn.
K-Electric set up in 1913 as a public-sector company and was sold to Aljomaih Group (Saudi Arabia) in 2005, who sold it to the UAE’s Abraaj Capital in 2009. Since that date, the company has added 1 GW of power capacity (it now operates 2.3 GW of power capacity) and reduced the average T&D losses from 39% in 2009 to 23% in 2015. K-Electric operates the largest power transmission and distribution network in Pakistan, delivering power to 2.2 million customers in the Karachi area.
This acquisition is in line with Shanghai Electric's strategy to seek growth overseas. The group has already developed two small solar projects in Japan and is developing new energy projects in Japan, Turkey, Tanzania, Malta and Mozambique. Shanghai Electric now bets on the rising electricity demand in Pakistan, which is forecast to grow by an average 9.2%/year between 2013 and 2020 and by 7.9%/year between 2020 and 2035.