SHANGHAI, CHINA : China’s Shanghai Electric Power will buy a controlling stake in K-Electric, a power generation and distribution company in Pakistan’s largest city, for US$1.77 billion, K-Electric’s parent firm said here in a press statement.

Dubai-based Abraaj Group said it had entered into a definitive agreement with Shanghai Electric to divest its 66.4 percent stake in K-Electric .

K-Electric serves around 2.2 million customers in and around Karachi, Pakistan’s largest city with a population of about 20 million. It is involved in both generation at thermal power plants and power distribution.

“Today marks a milestone in that partnership as we enter into a definitive agreement to divest our stake in a high performance business and market leader to a strategic buyer who is fully committed to continuing this success story into the future,” Arif Naqvi, Abraaj’s chief executive, said in a statement.

When completed, the deal will be the biggest M&A in Pakistan in a decade. Large parts of the Pakistani economy remain nationalized, or held by a few private businessmen, rather than diversified companies.

“The K-Electric transaction only marks the beginning of SEP’s cooperation with Abraaj and we look forward to further collaboration between the two parties in many other areas in the future,” Wang Yundan, Shanghai Electric Power’s CEO, said in a statement.

Shanghai Electric Power announced its intention to bid for the stake in August.

Chinese companies’ interest in Pakistan is growing after China announced energy and infrastructure projects worth US$46 billion in the South Asian nation last year.