KES Power Limited, which has IGCF SPV 21 Limited as its largest stakeholder, notified the Pakistan Stock Exchange on Thursday that the business intends to buy a direct stake in K-Electric Limited (KE).
K-Electric’s holding company has been petitioned for a “just and equitable winding up” by IGCF SPV21 Limited, according to a forcefully worded statement.
The Grand Court of the Cayman Islands received IGCF SPV 21 Limited’s (“SPV21”) petition for a Just & Equitable Winding Up of KES Power Limited (“KESP”) on July 7, 2023. The sole asset of KESP, which has its domicile in Cayman, is 66.4 percent of K-Electric Limited (or “KE”), which serves as a holding company for KESP.
KESP’s major shareholder, SPV21, holds a 53.8 percent stake in the company. The Infrastructure and Growth Capital Fund L.P. (“IGCF”), which was once run by the long-gone Abraaj Group, is the ultimate owner of SPV21. On behalf of its limited partners, the General Partner of IGCF now oversees operations.
Sage Venture Group Limited (“SVGL”), a special purpose company of AsiaPak Investments Limited (“AsiaPak”), has owned the general partner of IGCF since October 2022. The ultimate beneficial owner of SVGL and AsiaPak is Pakistani national Shaheryar Chishty.
As part of a 2009 rescue operation to turn around KE after the 2005 privatization had failed to provide favorable results, SPV21 invested in KESP. SPV21 became the biggest stakeholder in KESP as a result of injecting new funds into KE.
The original KE privatization in 2005 resulted in sale earnings going primarily to the Government of Pakistan, and not as capital investment into KE. According to IGCF, the only FDI that KE has ever received from KESP came from monies given by IGCF investors.
Investment capital given by IGCF investors allowed KE’s affairs to significantly improve. The firm stated that it is not distressed to see that KE has deteriorated since the bankruptcy of Abraaj in 2019, with KE’s affairs not yielding favorable outcomes for Karachi’s customers, KE shareholders, business partners, or lenders.
As a result, IGCF believes that KESP is no longer fulfilling its main purpose and that shareholder disagreements are a significant deterrent to aiding in the turnaround of KE. For these reasons, IGCF has petitioned the Cayman Court to dissolve KESP.
The Cayman Islands courts have the last say in the Just & Equitable Winding up of KESP. The daily administration and operations of KE won’t be affected, though. The KE Board and administration continue to function separately from KESP.
By taking this move, SPV21 is only attempting to acquire its KE shares directly rather than through KESP, a holding company that has, regrettably, served no useful function in light of the persistently unfavorable actions of KESP’s minority shareholders.
