KARACHI: In an opaquely worded notification issued on the Pakistan Stock Exchange, K-Electric Ltd said on Thursday “changes have been consummated” involving IGCF General Partner Ltd (IGCF GP), a fund manager, and the Infrastructure and Growth Capital Fund L.P. (Fund), which owns the fund’s assets.

Analysts interpreted the dense text of the regulatory filing as an acknowledgement of the transfer of K-Electric’s major shareholding to Sage Venture Group Ltd, a British Virgin Islands–registered special purpose company wholly owned by AsiaPak Investments Ltd.

K-Electric’s holding company is Cayman Islands-registered KES Power Ltd, with a shareholding of 66.4 per cent. The government of Pakistan controls 24.36pc shareholding in K-Electric while the rest is owned by institutional investors and the general public.

The doomed private equity fund Abraaj Capital held a majority stake in KES Power Ltd until its chief, Arif Naqvi, was arrested in 2019 for misappropriating investors’ funds.

In a 2020 interview with Dawn, K-Electric Ltd CEO Moonis Alvi said Abraaj Capital acted “only as a management company” while actual investors belonged to the Infrastructure and Growth Capital Fund. This appears to be the same fund that Sage Venture Group Ltd has now taken over in the offshore transaction.

Speaking to Dawn, Standard Capital Securities research analyst Shahzad Khan said the transaction seems to be an outcome of the Cayman Court–sanctioned sale of certain assets of Abraaj Investment Management (AIM), which is currently undergoing official liquidation internationally. AIM held a controlling interest in KES Power, he said.

“If the now-defunct AIM had a controlling interest in KES Power, and also appointed the majority of directors on the K-Electric board, then whoever steps into its shoes will also have control over K-Electric,” he said while referring to a series of recent news stories published in The News.

The change in K-Electric ownership was first reported by the newspaper’s London-based reporter on Oct 12. Subsequently, K-Electric expressed ignorance about any such development. The company confirmed it — albeit in a highly convoluted language — through a stock notice only on Thursday.

“The Fund is a Cayman Islands-registered private investment fund with numerous institutional investors that is managed by the IGCF GP and holds multiple assets, including an indirect non-controlling shareholding in K-Electric… the Fund does not have a controlling interest in K-Electric nor a controlling position on the K-Electric board of directors,” the company said in its latest filing without mentioning the Fund’s exact shareholding in KES Power, which is the direct majority shareholder of K-Electric.

“It’s unclear what percentage of shares Sage Venture Group will now own in KES Power,” said Mr Khan of Standard Capital Securities.

It should be noted that KES Power has also decided to “make certain changes to its nominee directors” on the K-Electric board. Boudewijn Clemens Wentink and Khaqan Saadullah Khan resigned from the K-Electric board as non-executive directors nominated by KES Power on Thursday.

The regulatory disclosure included no dollar value, thanks to the high level of secrecy enjoyed by offshore entities registered in global tax havens like British Virgin Islands and Cayman Islands.

The News earlier reported that Sage Venture Group is owned by Shehryar Chishti, a distressed asset purchaser who serves as chairman of Daewoo FastEx buses and Liberty Power.

Shanghai Electric Power had agreed to buy a controlling shareholding in K-Electric from Abraaj back in 2016 for a sum of $1.77 billion. But the transaction remains incomplete because the seller has so far failed to obtain the required approvals from different authorities.

Published in Dawn, October 21st, 2022