Karachi, November 03, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has noted the announcement relating to ‘Sale and Purchase Agreement’ entered into between KES Power Limited (majority owned by Abraaj Group) and Shanghai Electric Power Company Limited (SEP) for sale of up to 66.4% shares of K-Electric Limited (KE). The transaction will close once customary closing conditions and requisite regulatory approvals are obtained. JCR-VIS believes that financial profile and ownership structure of SEP along with expected synergies in various business and operational areas will have positive implications for KE. JCR-VIS will await strategic announcements, if any, from the new sponsor.
SEP is controlled by State Power Investment Corporation (SPIC), which is a fortune 500 company in China. Listed on the Shanghai Stock Exchange, SEP is mainly responsible for the power supply of Shanghai, with generation of 35.23 TWh in 2015.
For KE, JCR-VIS has an outstanding entity rating of ‘AA/A-1’ (Double A/A-One). Sukuk 2 (Rs. 3.75b) & Sukuk 3 (Rs. 1.5b) are rated ‘AA’ (Double A) while Sukuk 4 (Rs. 22b) has a rating of ‘AA+’ (Double A Plus). The assigned ratings predicate the strategic importance of KE as a vertically integrated utility having exclusive rights to distribute electricity in the largest metropolitan city of Pakistan. Ratings also incorporate turnaround in financial and operational performance metrics achieved by KE since its takeover in 2009 by Abraaj Group.
For further information on this rating announcement, please contact the undersigned (Ext: 249) or Mr. Javed Callea (Ext: 234) at 92-21-35311861-70 or fax to 92-21-35311873.
Jamal Abbas Zaidi
Applicable Rating Criteria: Industrial Corporates (May 2016)
Notching The Issues (June 2016)
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