Chinese companies are now in a race to get a controlling stake in a Pakistani utility firm China gears up for more investment in the country.
State-backed companies Shanghai Electric Power and China Southern Power are among the half-dozen firms vying for the $1.5-billion sale of K-Electric KELA KA, Bloomberg reported. The sales price represents a 66 percent controlling share of the company owned by Dubai-based Abraaj Group, who initiated the bidding.
The Pakistani government owns 24 percent of the company, but government officials said that they are not planning to sell their shares.
If successful, K-Electric, which is Pakistan's largest electric company and serves around 2.2 million customers in Karachi, would be Shanghai Electric Power's biggest overseas acquisition to date. In 2014, the company got a $399 million stake in Maltese utility provider Enermalta.
Shanghai-based Golden Concord Holdings is also among the bidders, along with several Pakistani and other foreign companies.
However, K-Electric and Abraaj clarified that there is still no final word on the offering. According to a K-Electric spokesperson, they have yet to be notified of any acquisition.
The sale is considered as the biggest acquisition offer that Pakistan has offered in ten years and comes at a time when the country is vigorously trying to attract more Chinese investments to reinvigorate its economy, Reuters reported. While mergers and acquisitions have grown in the last five years, foreign investors are still wary of the country's security and stability.
For China, the acquisition serves as another entry into the fledgling Pakistani market. In 2015, China has announced more than $46 billion worth of infrastructure and energy projects for the South Asian country.
Pakistan is seen as an important component in Chinese President Xi Jinping's ambitious "One Belt, One Road", which aims to open new trade routes across Asia. The China-Pakistan Economic Corridor (CPEC) serves as the main mover for Chinese funding pouring into Pakistan.