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The Abraaj Group on Sunday announced that a $1.77 billion stake in K-Electric will be sold to China’s state-backed Shanghai Electric Power (SEP).

The Abraaj Group boasted that the company has undertaken one of the largest private sector transactions in the country.

"Upon completion, this will be one of the largest private sector transactions in Pakistan and represent one of the global power industry’s most well-recognised operational turnaround stories," said a press release issued by the Abraaj Group.

The Abraaj Group has entered into "a definitive agreement to divest its stake in K-Electric to Shanghai Power Company for $1.77bn," the statement said.

Chairman of SEP Wang Yundan said, "SEP appreciates what Abraaj has achieved at K-Electric over the past seven years and recognises the performance and capability of K-Electric’s management team."

"SEP will leverage its own strengths as a strategic investor and further realise K-Electric’s potential to provide better services to the people of Pakistan and the Government of Pakistan. SEP is confident about working together with Abraaj in the future to transform K-Electric into one of the best companies in Pakistan."

Commenting on the exit, Abraaj Group Founder and Group Chief Executive Arif Naqvi said, "Today marks a milestone... as we enter into a definitive agreement to divest our stake in a high-performance business as market leader to a strategic buyer who is fully committed to continuing this success story into the future."

K-Electric serves 2.5 million consumers in and around Karachi. The company, formerly known as the Karachi Electric Supply Company, was incorporated in 1913 and is a publicly listed fully integrated power utility involved in generation, transmission and distribution. The company was privatised in 2005 and Abraaj took a majority stake in 2009 through its funds, the statement said.

Shanghai Electric Power, a subsidiary of the State Power Investment Corporation of China, is engaged in the generation and transmission of electricity, and the operation and maintenance business in the energy service sector, it said.

Read more: Editorial — Chinese interest in K-Electric