ADVICE FOR INVESTORS INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS ESPECIALLY THE RISK FACTORS AT PARA [•] OF THIS PROSPECTUS BEFORE MAKING ANY INVESTMENT DECISION SUBMISSION OF FALSE AND FICTITOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICANT’S MONEY MAY BE FOREFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015 K-Electric Limited Date of Incorporation: September 13, 1913, Incorporation Number: 0000002 , Registered and Corporate Office: KE House, 39-B, Sunset Boulevard, Phase II, Defence Housing Authority, Karachi, Contact Number: 92-21-3870 9132 , Website: www.ke.com.pk, Email: [email protected] Prospectus The Issue Size of Rated, Secured and Listed Diminishing Musharakah Sukuk of up to PKR 25,000 million, out of which Sukuk of PKR 23,708 million (94.8% of Issue Size) are issued to the Pre-IPO investors and PKR 1,292 million (5.2% of Issue Size) are being offered to the general public by way of an Initial Public Offering through this Prospectus Rate of Return: 7-year floating rate instrument @ 3-month KIBOR (Ask Side) plus 1.70% per annum Instrument Rating: AA+ (Double A Plus) by VIS Credit Rating Company Limited Long Term Entity Rating: AA (Double A) by VIS Credit Rating Company Limited & Pakistan Credit Rating Agency (PACRA) Short Term Entity Rating: A1+ (A One Plus) by VIS Credit Rating Company Limited & Pakistan Credit Rating Agency (PACRA) As per PSX’s Listing of Companies and Securities Regulations, the Draft Prospectus was placed on PSX’s website for seeking public comments starting from [•],2020 to [•], 2020. The comments received have been duly incorporated / responded by the Consultant to the Issue. Date of Public Subscription: from [•]/2020 to [•]/2020 (both days inclusive) from: 9:00 am to 5:00 pm From DD/MM/2020 to DD/MM/2020 only individual investors can apply From DD/MM/2020 to DD/MM/2020 all investors i.e. individuals and institutions can apply (For further details please refer to para [•]) SHARIAH STRUCTURING STRUCTURING AGENTS CONSULTANT TO THE ISSUE ADVISOR Bankers for the Retail Portion of the Issue: Askari Bank Limited Bank AL Habib Limited* Bank Alfalah Limited* Bank Islami Pakistan Limited Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited* Habib Metropolitan Bank Limited MCB Bank Limited MCB Islamic Meezan Bank Limited Soneri Bank Limited United Bank Limited* * In order to facilitate investors Habib Bank Limited (“HBL”), Bank Alfalah Limited (“BAFL”) and United Bank Limited (“UBL”) are offering electronic submission of application (e-IPO) to their account holders. HBL account holders can use HBL Net Banking to submit their application via link https://www.hblibank.com.pk/Login. BAFL account holders can use BAFL Net Banking to submit their application via link https://netbanking.bankalfalah.com. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank. Furthermore, please note that online applications can be submitted 24 hours a day during the subscription period which will close at midnight on [•]/2020. The Central Depository Company of Pakistan (“CDC”) in collaboration with 1 Link (G) Limited (1 Link) has developed a Centralized e-IPO System (“CES”) through which applications for subscription of securities offered through IPOs can be made electronically. CES has been made available in this IPO which can be accessed through the web link www.cdceipo.com. Payment of subscription money can be made through 1Link’s member banks available for CES, list of which is available on CDC’s above mentioned web link. For making application though CES, investors must be registered with CES. Registration with CES is one-time, free of cost and a self-registration process carried out by filling the CES registration form, which is available 24/7 all around the year at CDC’s above mentioned web link Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial banks, email address, mobile phone number and CDS Account (Investor Account or Sub Account) may register themselves with CES. Investors who do not have CDS accounts may visit www.cdcpakistan.com for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone number: 0800 – 23275 (CDCPL) and e-mail: [email protected]. CES is connected to a number of banks through 1 Link for payment of the subscription money. For further details on CES, please refer to para 14.3 of this Prospectus or contact Mr. Farooq Ahmed Butt at Phone 021- 34326030 and email: [email protected]. Shariah Advisory Board Dr. Muhammad Zubair Usmani Mufti Irshad Ahmad Aijaz Dr. Ejaz Ahmed Samadani Dr. Noor Ahmed Shahtaz Mufti Muhammad Yahya Asim For investor education please visit www.jamapunji.pk and read the IPO Investor Guide placed at web link https://www.secp.gov.pk/document/initial-public-offering-ipo-a-concise-guide-for-investors/?wpdmdl=29584 Jama Punji is an investor education initiative of SECP Date of Publication of this Prospectus: [•]/2020 Name of Securities Exchange: The Issue is proposed to be listed at the Pakistan Stock Exchange Limited Prospectus and Subscription Form can be downloaded from the following websites: www.ke.com.pk & http://www.arifhabibltd.com For further queries you may contact K-Electric Limited: Mr. Muhammad Farrukh; Phone:+ 111-537-211 (Ext: 1337); E-mail; [email protected]; Mr. Abdul Muqeet Husain; Phone:+ 111-537-211 (Ext: 7585); E-mail; [email protected]; Habib Bank Limited: Mr. Khurram Shaukat;. Phone: +92 21 33116504 ; E-mail: [email protected] ; Mr. Shmail Amin; Phone: +92 21 33116510; Email: [email protected]; Ms. Sana Hidayatullah; Phone: +92 21 33116537; Email: [email protected] National Bank of Pakistan Limited: Mr. Muhammad Aamir Khan Phone: +92 2199062124 ; E-mail: [email protected] ; Mr. Frasat Ali; Phone: +92 21 99062119; Email: [email protected] Arif Habib Limited: Mr. Dabeer Hasan; Phone: +92 21 3246 5891; E-mail: [email protected] ; Mr. Ammad Tahir; Phone: +92 21 3243 3542; Email: [email protected] Sukuk Prospectus | K-Electric Limited UNDERTAKING BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER Date: April 06, 2020 WE, SYED MOONIS ABDULLAH ALVI, THE CHIEF EXECUTIVE OFFICER (CEO) AND MUHAMMAD AAMIR GHAZIANI, THE CHIEF FINANCIAL OFFICER (CFO) OF K-ELECTRIC LIMITED, HEREBY CERTIFY THAT: 1. THE PROSPECTUS CONTAINS FULL AND COMPLETE INFORMATION WITH REGARD TO THE ISSUERS AND THE ISSUE, WHICH IS MATERIAL IN THE CONTEXT OF THE ISSUE AND NOTHING HAS BEEN CONCEALED IN THIS RESPECT; 2. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF; 3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD; 4. THERE ARE NO OTHER MATERIAL FACTS, OMISSION OF WHICH MAKES THE PROSPECTUS AS A WHOLE OR ANY PART THEREOF MISLEADING; AND 5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015; THE DISCLOSURES IN PUBLIC OFFERING REGULATIONS, 2017 FOR PREPARATION OF PROSPECTUS AND THE PSX’S RULE BOOK RELATING TO DISCLOSURES AND APPROVALS HAVE BEEN FULFILLED. 6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC., HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN RELATION TO THIS PUBLIC OFFERING EXCEPT FOR THOSE AS DISCLOSED IN THIS PROSPECTUS. On behalf of K-Electric Limited -Sd- -Sd- Syed Moonis Abdullah Alvi Muhammad Aamir Ghaziani Chief Executive Officer Chief Financial Officer Page 2 of 129 Sukuk Prospectus | K-Electric Limited GLOSSARY OF ABBREVIATIONS 3M KIBOR Three-Month Karachi Inter-Bank Offered Rate (Ask Side) Bn Billion BoD Board of Directors Bps Basis points. One hundred basis points equal 1 per cent. BYCO BYCO Petroleum Pakistan Limited Capex Capital Expenditure CDC Central Depository Company of Pakistan Limited CDS Central Depository System CEO Chief Executive Officer Company or Issuer or KE K-Electric Limited Collection Bank Habib Bank Limited CPPA-G Central Power Purchasing Agency (Guarantee) Limited EHT Extra High Tension FY Financial Year ending 30th June FO Furnace Oil FSA Fuel Supply Agreement GoP Government of Pakistan HSEQ Health, Safety, Environment & Quality IBC Integrated Business Centres i.e. a network of more than 30 customer facilitation centres. IM Information Memorandum Page 3 of 129 Sukuk Prospectus | K-Electric Limited IPO Initial Public Offering IPPs Independent Power Producers MMBTU Million British Thermal Units MMCFD Million Cubic Feet per Day Mn Million MVAs Mega Volt Amperes MW Megawatt NCCPL National Clearing Company of Pakistan Limited NTDC National Transmission and Despatch Company Limited Opex Operating Expenditure p.a. Per annum PAEC Pakistan Atomic Energy Commission PPA Power Purchase Agreement PKR or Rs. Pakistani Rupees PMTs Pole-Mounted Transformers PSO Pakistan State Oil Company Limited RLNG Re-Gasified Liquefied Natural Gas SBP State Bank of Pakistan SECP Securities & Exchange Commission of Pakistan SSGC Sui Southern Gas Company Limited T&D Transmission and Distribution Page 4 of 129 Sukuk Prospectus | K-Electric Limited GLOSSARY OF TECHNICAL TERMS Assigned Security Listed security or derivative contract designated by the stock exchange from time to time, for which a designated market maker has been appointed by the exchange for market making Base Rate Average three (03) months Karachi Inter Bank Offered Rate (KIBOR) prevailing on the Base Rate Setting Date Base Rate Setting Date Means the date upon which the Trustee shall establish the Base Rate