Sale of controlling stake in KE nearing completion at Cayman court

Sale of interests is being spearheaded by Shehryar Chishti, who became involved in KE deal few months ago

Murtaza Ali Shah
in this illustration, KEs logo can be seen. — Twitter/File
in this illustration, KE's logo can be seen. — Twitter/File
  • Pakistan unaware of developments at  Cayman Islands court.
  • The matter is being dealt in complete secrecy, insiders say.
  • Sale of interests being spearheaded by Shehryar Chishti.

LONDON: The sale of a large part of the controlling stake in Karachi-Electric (KE) held by KES Power outside Pakistan appears to be at advanced stages — awaiting approval from a Cayman Islands court.

However, the Government of Pakistan is unaware of the deal because the matter is being dealt in complete secrecy, according to trusted insiders.

The sale of these interests which control KE is being spearheaded by Shehryar Chishti, who became involved in the KE deal a few months ago, through a recently incorporated entity called Sage Ventures Limited formed in an offshore tax haven, according to papers seen by

Shehryar is the chairman of Daewoo FastEx buses and Liberty Power. He is known as a distressed asset purchaser — a situation which arose in KE following the collapse of Abraaj Group in 2018.

Although Abraaj Group had contracted to sell KES Power’s controlling stake in KE in 2016 to Shanghai Electric (Shanghai), that sale has run into bureaucratic difficulty even though every successive government, including PML-N supremo Nawaz Sharif, Shahid Khaqan Abbasi, and PTI Chairman Imran Khan had all publicly supported the deal to take place.

Meanwhile, Shanghai keeps renewing its mandatory tender offer every six months on the Pakistan Stock Exchange (PSX), even though insiders maintain that any deal if it happens will be quite different in terms of price from the original deal agreed by Shanghai.

Trusted sources, familiar with the Cayman court proceedings, have directly shared with that one of the liquidators of Abraaj — namely Deloitte based in Cayman and the appointed administrators of an Abraaj-managed Infrastructure and Growth Capital Fund (IGCF), namely Alvarez and Marsal (A&M) based in London — have agreed to a deal which was presented to the Cayman Court for approval under seal.

The sources further said that the secrecy around the court documents appears to have even left the other liquidators, PwC in Cayman, and the receivers of a secured creditor, Mashreq Bank in UAE who held a charge over the Abraaj direct ownership in KES Power unaware.

Enquiries made to some KES Power shareholders indicated that they were unaware of the details of this deal, which meant that the deal was being done directly by Sage Ventures with the Abraaj liquidators.

When contacted by, a senior executive of KE said: “I have no information (about the deal) and cannot comment.”

Senior figures at the Shanghai Power and the Ministry of Power told upon a query that the authorities were not aware yet of any Cayman proceedings.

Another source at the KE said that the company, if aware of the Cayman proceedings, would have to report such a fact to the PSX.

KE supplies power to 22 million consumers in Karachi and is the largest player in Pakistan’s energy sector apart from the government itself. It was privatised by sale to KES Power in 2005, which was a joint consortium of Al Jomaih Group (one of the largest family-owned business houses of Saudi Arabia) and National Industries Group (NIG) — the largest publicly owned company in Kuwait.

In 2009, the Abraaj Group acquired an equal share and management control in KES Power with permission from the government. The Abraaj investment stake was 70% owned by IGCF, which was owned by numerous international investors and 30% by Abraaj itself.

The privatisation of KE was widely considered to have been successful. Between 2005 and 2016 when KES Power agreed to sell it to Shanghai for $1.8 billion, the power supply company had been turned around and posted its first annual profits in 17 years in 2012 with profits exceeding $400 million in 2016.

Pakistan's government issued a statement welcoming the sale to Shanghai at that time which remained subject to regulatory and government approvals including a National Security Clearance certificate and issuance of a new NEPRA tariff. Six years later, the sale process is nowhere near completion.

At the same time, developments at Abraaj itself deeply affected the transaction. The parent and management companies of Abraaj entered voluntary liquidation in Cayman Court in 2018 which appointed separate liquidators to different parts of the same business group. This did not and should not have affected the solvency of its subsidiaries and the funds like IGCF which they managed for outside investors, and which remained successful and operational.

KES Power was not a subsidiary of Abraaj even though until 2018 it was managed by the group. Since then, it has been managed independently and a new Chairman of KE — Shan Ashary — was appointed.

Ashary represented Al Jomaih and NIG. Shehryar's involvement with KE started a couple of months ago.

Around two months ago, Ashary’s term as Chairman of KE was not renewed and Mark Skelton of A&M was given that role, according to a trusted source in KE.

The SECP didn’t raise objections to the latter's appointment. Legal sources also indicate that any change of ultimate control would have to involve issuing a mandatory tender offer since KE is listed, but enquiries have revealed that the stock exchange and SECP are both unaware.

Whilst all this was happening inside Pakistan, Sage Ventures and Chishti began to work behind the scenes to make an offer for controlling influence in KES Power in the Cayman Islands by approaching the liquidators of Abraaj.

A decision was expected from the Cayman Court on the Deloitte/A&M application about the Sage Ventures offer last week but the decision was apparently delayed when certain objections were raised. Enquiries at the Cayman Court did not prove fruitful since the court proceedings were sealed, which adds mystery and suspicion to the moves being made to transfer control of a strategic national security asset of Pakistan without the knowledge of most of its stakeholders.Documents seen by and issued by Chishti and Sage Ventures to the IGCF investors have revealed that the KE stake held by KES Power is being attempted to be acquired at a fraction of the Shanghai deal price. 

It goes on to say that the “recent public financial and political issues transpiring in the Islamic Republic of Pakistan, including but not limited to the recent change in government and the recent, and continuing, material decline in the value of the Pakistani Rupee” as a rationale for urging international investors to accept this deep discount.

“In order to help achieve the transaction rationale, the Acquiror has entered into an agreement with ABRAAJ Investment Management Limited (In Official Liquidation) ('AIML') to acquire AIML’s assets and interests relating to IGCF, including its majority, controlling stake in IGCF General Partner Limited (the 'GP Interests')," it adds.

The documents also clarify that “The Acquiror has entered into an agreement with Alvarez and Marsal Europe LLP (“A&M”) whereby effective as of the closing date of the acquisition of the LP Interests and the GP Interests, A&M shall continue to provide on-going assistance and support to the Acquiror and IGCF GP on an interim basis.”

It appears that it is the contents of these agreements, which presumably are the basis of the sealed applications to the Cayman Courts for approval.

One document says: “We have made this Proposal on the condition that none of its existence, its contents or our discussions relating thereto will be disclosed publicly or to any third party by you, and this Proposal will be deemed withdrawn upon any unauthori[s]ed disclosure."

A source at the KE said it appears that a deal was done under seal and secrecy with Deloitte and A&M.

The source said: “This is a deal cooked in secret about a strategic asset of Pakistan. There is no transparency or clarity on who is funding the acquisition and what is the sources of these funds.”

Shehryar Chishti didn’t respond to questions.