LONDON: Shaan Abbas Ashari, Chief Investment Officer (CIO) of Al Juma and Director of Karachi Electric (KE) has announced the ownership of Infrastructure and Growth Capital Fund (IGCF Fund) in IGCFSPV21 Limited. vehemently denied the claim that it was made by K Electric. Majority Shareholder
In an interview, Ashhari said that this claim is completely false and baseless.
He said both Al Jumeih Power and Denham Investments have a combined 46.2 percent stake in KES Power and highlighted the uncertainty surrounding the ownership of the IGCF Fund and its further ownership in IGCF SPV 21 Limited. He claimed that transparent transactions were conducted through Sage in the Cayman Islands.
Ashhari said the recently emerged group claiming majority ownership of IGCF should first understand the implications and necessary permissions required by the Government of Pakistan (GoP) regarding any significant change in KE’s ownership. Which is a matter of national security.
As an example, he pointed to the situation in China’s state-owned Shanghai Electric Power Company (SEP)’s acquisition of KE, whereby the documents put checks and balances in place to ensure that no one else would take ownership. Could not enter the chain. Darwaza said that this is common sense as the GoP would not want the end of KE in the hands of hostile parties.
He emphasized that the current matter in the Pakistani courts is not related to the ownership of KE and is only a jurisdictional issue. Although Shahryar Chishti claims ownership, he has not provided any evidence, neither to the courts nor to other KE stakeholders, Ashari said.
Chishti, on his part, says that he has fulfilled all the legal requirements and everything has been done according to the spirit of the law.
Ashari said there is no evidence in his unverified claim of sufficient IGCF share, especially with more than 80 original investors who subscribed to the IGCF fund. He added that as per Chishti’s own declaration he owns about 20% of the IGCF fund and that would translate to about 5% of KE, undermining his major ownership claim.
IGCF SPV 21 said in a new statement: “It has the legal right to appoint its allotted nominees to the KE Board under the KESP Shareholders Agreement, mutually agreed between IGCF SPV 21 and KESP minority shareholders. had gone. This right was established in the Cayman Courts in 2009 and reaffirmed by court order in July 2023.
However, the CIO pointed out that the jurisdiction of the Cayman Court decision is limited by previous agreements signed during Abraaj’s tenure, however, the hearing is not final and further court dates have been set in the Cayman Islands. Ashari added that KE’s ownership has national security implications, requiring clearance at various levels.
He also questioned the source of funds for the stake acquired by Asia-Pak and said a disclosure was required. Chishti says they have followed legal guidelines in arranging and collecting the funding.
The Cayman Islands Court has not issued any guidance on the management of KE or the composition of its board of directors.
“K-Electric is of significant importance as a Pakistani asset, with strategic value. It also has a significant investor base from Pakistan. Additionally, the Government of Pakistan holds a 25 percent ownership stake in K-Electric.”
According to Ash’ari, potential owners will need security clearance from the Privatization Commission of Pakistan.
“A petition has been filed by us in the Sindh High Court. With an 18-year history of running K-Electric, our commitment is unwavering and we will continue to do our best. No funds have been withdrawn from K-Electric. All Resources have been invested in the institution, resulting in significant improvements.
Giving the background, he said Saudi Arabia’s Al Jumiya Group and Kuwait’s National Industries Group (NIG), collectively known as the original shareholders, acquired KE stake in 2005. In 2008, Abraaj joined IGCF SPV 21.
Following the Abraaj liquidation scandal in 2018, liquidators administered IGCF SPV 21 shares in KESP. In 2022, Sage Ventures – a newly incorporated entity with no track record – owned by Chishti and his spouse claimed a majority stake in the Cayman Islands through backdoor transactions.
It was and will continue to be strongly opposed by the original shareholders, the Saudi and Kuwaiti conglomerates.
Ashhari said the IGCF Fund’s stake in IGCF SPV 21 is purely non-voting, which means there is no management right associated with the acquisition of shares, but only a beneficial interest.
In October 2022, Sage Venture Group Limited – a special purpose company registered in the British Virgin Islands under AsiaPak Investments Ltd – assumed the role of “General Partner” for the IGCF.
The transfer took place through a closed-door court process whereby the assets were sold by Abraaj Investment Management Limited – a company that was undergoing official liquidation proceedings. A general partner raises capital from investors and oversees the private equity fund on behalf of the limited partners. Now both the current general partner and its parent company are ultimately owned by Chishti.
The original stakeholders claim that there is no basis in the claim of majority ownership in K Electric. Acquiring IGCF’s General Partner (GP) involves only management rights, devoid of economic stake in KE. The share of the IGCF Fund in the IGCF SPV 21 consists entirely of non-voting shares.
KESP owns 66.4% in KE. IGCF SPV 21 holds a 53.6% stake in KESP, while Saudi and Kuwaiti shareholders hold 46.4%. However, the IGCF Fund owns only 70% of IGCF SPV21, with the remaining 30% controlled by Mashreq Bank, a bank based in the United Arab Emirates. In short, IGCF Fund is not the actual owner of KESP or KE.
In a statement over the weekend, the IGCF said, indirectly quoting the Saudi and Kuwaiti owners, that “KESP minority shareholders are sitting comfortably abroad and continuing their illegal battles.”
It said, “IGCFSPV21 should be immediately fully seated in the KE Board to enable a large-scale transformation of KE with a comprehensive focus on providing affordable and reliable electricity to Karachi.” can be led.”
In 2008, the Government of Pakistan granted a unique waiver for Abraaj’s participation, allowing them to enter into an investment project. Abraaj used a Cayman Islands-based special purpose vehicle named IGCF SPV 21. The institution attracted more than 80 investors including Abraaj within the IGCF fund framework, as confirmed by records. No such approval was sought by Sage, which sought to enter the equation through hidden transactions in offshore jurisdictions, Ashrey said.
Following the liquidation of Abraaj in 2018 due to a major scandal, the task of managing the company’s shares — which included limited partners (LP) within the IGCF fund — was taken over by the liquidators. Subsequently, the original shareholders and liquidators worked together to complete the sale of KE to Shanghai Electric.
Complicating matters are the different share classes, including voting and non-voting shares, held in the Cayman Islands. Scrutiny of the share register of SPV 21 reveals Abraaj Investment Management Limited (AIML) as the exclusive holder of the voting stock, which is currently undergoing liquidation. This triggers additional questions over actual ownership, pointing to tougher legal disputes to come.
Original stakeholders, who own 30.7% of KE, and Mashreq Bank from the United Arab Emirates, a major stakeholder with 10.5% see-through ownership, together own a substantial 41.2% in KE. They share common goals, which aim to improve K-Electric and attract foreign direct investment (FDI) to Pakistan. Since 2005, these shareholders have not received dividends, reinvesting funds to strengthen KE’s capabilities and drive expansion.
There are four main players in KESP. Three legal cases are pending against a particular player. One doesn’t need an MBA or a law degree to figure out that this particular player has caused some degree of wrongdoing for the other three stakeholders to take legal action against one player at the same time. What would have been committed,” Ashari concluded.
