Abraaj is close to reaching agreement with the Pakistan government that will allow the failed emerging markets private equity firm to sell its 66 per cent stake in Karachi-based K-Electric to a Chinese group, the Financial Times reported.
According to the report, two years ago, the company’s sale price to Shanghai Electric Power was set at about $1.8bn, which would have earned Abraaj about $450m.
The Financial Times quoted senior people at Abraaj as saying that the deal, which had been held up by regulatory approvals, is being renegotiated, probably at a lower price.
The reduced valuation is in part due to a change in the tariffs that utilities are allowed to charge introduced before the original sale was agreed.
At the end of December, Shanghai Electric informed the Pakistan Stock Exchange that it intended to make a revised offer for a majority of the utility, which is a critical supplier of electricity to Karachi, a city with a population of nearly 15m and rising.
The sale is part of an ever growing number of transactions between Chinese interests and Pakistani companies. Chinese infrastructure companies are building ports, power plants, roads and railways as an initiative which is expected to see about $65bn in spending over five years, the report added.