The Executive Committee of Special Investment Facilitation Council (SIFC) set up on the instructions of Army Chief General Asim Munir has appointed a three-member committee to resolve the issues related to Karachi Electric (KE) after the original stakeholders from Saudi Arabia and Kuwait raised serious concerns.
The powerful committee composed of Minister for Energy (chair), Minister for Privatisation, and Minister for Law & Justice, was formed, according to sources, after the Saudi and Kuwaiti investors raised concerns at the highest level in Pakistan and requested for intervention in the wake of claims made by Infrastructure and Growth Capital Fund (IGCF) about the ownership of KE.
Those with inside knowledge of the development said the decision to form three-member committee was taken to assuage the Saudi and Kuwaiti concerns and the same message was sent to everyone involved in the dispute and claims.
The sources shared that it was intervention from the highest level that in the first week of September this year that the law ministry passed directives to the Privatization Division to maintain close vigilance on KES Power Ltd (KESP) and K-Electric’s case pending in the Sindh High Court owing to the strategic importance of the matter.
The ministry had advised the legal counsel of Privatization Division to seek the continuance of the stay with respect to changes to KE board of directors in the proceeding currently underway in Sindh High Court between KE’s shareholder over the legitimacy of the sale of shares to Sage Ventures Limited by the liquidators of Abraaj Investment Management Ltd. (AIML) who controlled Infrastructure and Growth Capital Fund (IGCF).
In October 2022, the Sindh High Court issued an interim order preventing any changes to the composition of KE’s Board of Directors without consent from principal shareholders of KES Power namely Al-Jomaih and NIG Holdings of Saudi Arabia and Kuwait respectively.
Shaheryar Arshad Chishty, Chief Executive Officer AsiaPak Investments Limited, confirms the same in a letter addressed to Mr Muhammad Ali, Federal Minister for Energy, Power & Petroleum. The letter says: “I welcome the formation of a three- member committee by the SIFC and appeal to your good offices to help resolve Al-Jomaih’s concerns so that we can all focus on putting KE on the path to recovery. I am the nominated Director representing IGCF in relation to these discussions and would request the SIFC committee to invite the principal decision maker on the Al-Jomaih side for a meeting to resolve these issues in a fair and amicable manner.”
KE sources have said that the original stakeholders advocate the sharp contrast to the two well established groups from Saudi Arabia and Kuwait, with decades of established standing and strong reputation in the international arena, getting into a partnership with an individual who completely bypassed the National Security Clearance process, has only 5% effective economic stake in KE, has been a defaulter for IFC and World Bank, and is facing multiple law suits not only from third parties in other cases but also from EY and parties within the KESP structure.
Furthermore, according to KE sources, the intentions of Shaheryar Arshad Chishty are quite apparent since he has issued winding up petition for liquidating of KESP, forcefully restructured board of KESP and also voted against KESP appointing legal counsel to defend itself in the court of law. These actions make Shaheryar Chishty an unsuitable and incompatible partner with the Original Shareholders, say sources.
The sources said that the formation of three-members committee is likely to look at all these issues to find an amicable resolution as directed from the highest quarters while valuing the strategic relationship bilateral with without causing friction with Saudi and Kuwait investors.
The development comes after a row started in media as to who owns majority shares in KE. Al-Jomaih Group of Saudi Arabia and National Industries Group (NIG) of Kuwait, collectively called as the Original Shareholders, obtained KE stake in 2005. In 2008, Abraaj joined the Original Shareholders through IGCF SPV 21. After the 2018 scandal of Abraaj’s collapse, liquidators managed IGCF SPV 21 stake in KESP.
In 2022, Sage Ventures, a newly incorporated entity with no track record, owned by Chishty and his spouse, claimed majority stake through back door transactions in Cayman Islands. This was overwhelmingly opposed by Original Shareholders i.e., the Saudi and Kuwaiti conglomerates.
In October 2022, Sage Venture Group Ltd, a special-purpose company registered in the British Virgin Islands under AsiaPak Investments Ltd, assumed the role of "general partner" for IGCF. This transition occurred through a closed-door court process whereby AIML sold the assets, a company that was undergoing official liquidation proceedings. A general partner raises capital from investors and oversees a private equity fund on behalf of limited partners and acts as a manager. Now it seems both, the recent general partner and its parent company, are ultimately under the ownership of Chishty.
Original stakeholders contend that the assertion of majority ownership in KE lacks foundation. Acquiring the General Partner (GP) of IGCF only entails management rights, devoid of economic stake in KE. The IGCF Fund's share in IGCF SPV 21 consists solely of non-voting shares.
