K-Electric to Launch Public Sukuk Offering

K-Electric Limited, the nation’s only fully integrated electricity provider, intends to introduce Sukuk through a public offering.

The Pakistan Stock Exchange (PSX) communicated the application of K-Electric, a listed entity, to list its graded, unsecured, short-term Sukuk Certificates on the Exchange, also sharing KE’s prospectus.

The total issuance amounts to Rs 3,000 million. Of this, Rs 1,000 million has been allocated to Pre-IPO investors. The remaining Rs 2,000 million, encompassing a green-shoe option of Rs 1,000 million, will be offered to the general public through a public offering.

The Sukuk Certificates will be available in denominations commencing from Rs 10,000, with a baseline investment threshold of Rs 50,000, equivalent to 5 Sukuk Certificates.

K-Electric primarily operates in the generation, transmission, and distribution of electrical power, adhering to the Electricity Act of 1910 and the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, as per NEPRA guidelines.

According to K-Electric, the funds raised from the Sukuk Issue will primarily address the company’s routine working capital needs. These needs typically arise from discrepancies in the timing of cash outflows and essential inflows.

The prospectus indicates that these working capital requirements encompass payments for fuel and power purchases, which will be partially covered through the revenue generated by this financial instrument.

The company disclosed its prepared investment strategy of $2 billion spanning from FY24 to FY30, emphasizing the expansion of grid infrastructure, reduction of technical deficiencies, and amplification of renewable energy’s contribution to 30%.

Currently, K-Electric is engaged in developing more than 600 MW in solar and hybrid projects, in collaboration with the Government of Sindh and various private sector partners.

The power company has finalized new power acquisition and subsidy arrangements with the Government of Pakistan. These agreements seek to simplify power offtake and enhance cash flow dynamics.