KARACHI: The shareholding structure of the offshore entity that indirectly owns K-Electric Ltd remained shrouded in secrecy for years on end.

But the infighting among its “ultimate owners” solved this mystery last month when one group of investors sought the winding up of the Cayman Islands–based holding company of K-Electric in order to establish a direct shareholding in Karachi’s only power utility.

While the larger battle is being fought in the courtrooms of Karachi and Cayman Islands over one group of shareholders’ right to nominate directors to the board of K-Electric, a semantic sideshow centred around the use of “majority shareholder” is taking place mainly in the financial press these days.

Here’re some basic facts. The government of Pakistan controls 24.4 per cent shares in K-Electric while Cayman Islands-registered KES Power Ltd owns 66.4pc shareholding. The rest is owned by institutional investors and the general public.

The ongoing dispute over the nomination of directors to the board of K-Electric is between the two large groups of shareholders of KES Power, the holding company of the Karachi-based power utility.

One group of shareholders — represented by Infrastructure and Growth Capital Fund (IGCF)-owned SPV-21 Ltd — controls a 53.8pc shareholding in KES Power. The other group of shareholders — represented by Gulf-based investors Al Jomaih Power Ltd and Denham Investments Ltd — owns 46.2pc shares in KES Power.

When the local and international press referred to SPV-21 as “majority shareholder” — given its 53.8pc stake in the holding company — the other group took serious offence and wrote letters of protest to newspaper editors.

K-Electric Director Shan Ashary — who represents both Al Jomaih Power and Denham Investments that collectively control 46.2pc shares in KES Power — told Dawn on Friday the claim by Shaheryar Chishty of SPV-21 to be the majority shareholder of K-Electric is outright wrong.

“IGCF owns 70pc of SPV-21. The other 30pc (is) owned by entities in the control of Mashreq Bank. In short, IGCF is not the majority owner of either KES Power or K-Electric,” he said.

Mr Ashary said IGCF — a fund that Abraaj Group managed until its eventual collapse in 2019 — is owned by as many as 80 investors, and not by Shaheryar Chishty, the man fighting for the induction of new members into the K-Electric board.

In October 2022, Sage Venture Group Ltd — a British Virgin Islands–registered special-purpose company of AsiaPak Investments Ltd — became “general partner” of IGCF following a court-sanctioned sale of certain assets of Abraaj Investment Management, which underwent official liquidation internationally at the time.

A general partner brings in capital from investors and manages a private equity fund on behalf of its limited partners. The new general partner as well as its parent company are ultimately owned by Mr Chishty.

“[Mr Chishty] says he has bought about 30pc of IGCF. No proof yet. And even if he has [bought 30pc in IGCF], then he only owns about 11pc of KES Power or say 7pc of K-Electric. So his claim of [being] majority owner is wrong,” he said.

Even though Mr Chishty didn’t disclose to Dawn his exact shareholding in IGCF, he said in a phone call on Friday that he has declared complete financial details to the Securities and Exchange Commission of Pakistan.

“Even a first-semester MBA student would be able to tell Mr Ashary that a stake of more than 50pc in any entity makes one its majority shareholder,” he said, insisting that he controls 53.8pc shares in KES Power as fund manager of IGCF.

Published in Dawn, August 26th, 2023