K-Electric (KE) has announced the launch of Pakistan’s first-ever retail listed short-term Islamic debt instrument, the KE Retail Sukuk.

The pre-IPO phase, set at Rs1 billion, has been completed and was specifically designed for KE’s industrial and large commercial consumers, as well as high-net-worth individuals.

The IPO is set to open on August 4, allowing individuals across Pakistan, including KE’s residential and commercial customers, to invest. Currently in a blackout phase, the IPO will permit only individual investors until August 18, after which it will be open to all types of investors, including asset management companies.

This innovative financial product represents a significant milestone in Pakistan’s corporate sukuk landscape and aligns with the goals of the Securities and Exchange Commission of Pakistan (SECP) and the Pakistan Stock Exchange (PSX) to enhance secondary capital markets.

CFO of K-Electric, Muhammad Aamir Ghaziani, highlighted KE’s strong history in debt capital markets, stating, “K-Electric has been a pioneer in Sukuk Issuances by a Corporate Issuer in Pakistan.”

He noted that the company issued Rs6 billion in KE AZM Certificates in 2014 and the largest listed long-term sukuk of Rs25 billion in 2020.

Since January 2022, KE has issued 33 short-term privately placed Shirkat-ul-Aqd Sukuks to finance working capital needs. The launch of the KE Retail Sukuk further solidifies KE’s leadership in financial innovation and market engagement.

The KE Retail Sukuk has been reviewed and approved by three separate Shariah Boards, including HBL Shariah Board, ASAS Shariah Advisory Services, and Mufti Ali Asghar, ensuring compliance with Shariah guidelines and reflecting KE’s commitment to ethical and interest-free financial solutions.

Aamir explained that the KE Retail Sukuk offers an attractive investment opportunity, featuring high returns and tax advantages for investors.

It also includes a unique bill adjustment option against monthly profits for residential and commercial consumers, allowing investors to participate directly in KE’s core electricity provision operations.

KE aims to drive financial innovation and bolster Pakistan’s capital markets while continuing to invest in Karachi’s power infrastructure. Investors will receive their sukuk profits via bank transfers, unless they choose the profit adjustment option, ensuring a straightforward process.

Currently, the corporate sukuk market in Pakistan is largely dominated by privately placed instruments, with total corporate sukuk issuances at only Rs153 billion, representing 9% of the overall market, compared to sovereign sukuk issues amounting to Rs1.7 trillion, or 91% of the market.

The introduction of the KE Retail Sukuk seeks to encourage broader participation in the debt capital markets, providing a new investment avenue for individuals.