Investments and savings are two challenge areas for a big proportion of the population. Impacted by high rates of inflation, people look for avenues where their savings can grow.
Investors now more than ever are compelled to seek innovative avenues to diversify and enhance their investment portfolios. Sukuks, the Shariah-compliant variation of a conventional bond, have recently emerged as a decent investment option in terms of income generation, acceptability and Islamic appeal across the globe. The Sukuk market is driven by strong Islamic Investor demand and investors penchant for strategic diversification.
Outstanding global sukuk volumes are set to cross USD 1 trillion in 2025 with Southeast Asia having the most developed Sukuk markets. These Islamic Bonds are also expected to play a key part in the debt capital markets (DCM) in several member states of the Organisation of Islamic Cooperation (OIC). Sukuks will also stay significant in emerging markets (EM), representing approximately 12% of all EM US dollar debt issued in 2024 (excluding China).
K-Electric, the only privatized and vertically integrated power utility in Pakistan, has a long-standing history of successful Sukuk issuances, be it in the form of long-term instruments or short-term ones. However, it has now introduced the first-ever public sukuk offering in the short-term debt instruments space. This is a groundbreaking concept as even though we have good examples in regional economies like Malaysia, K-Electric becomes the first utility in Pakistan to open its doors for public investment funds for instruments with a tenure of less than twelve months.
This Retail Sukuk has an issue size of PKR 3 billion (USD 10.8 million) that will include a greenshoe option of up to PKR 1 billion (USD 3.6 million). Out of this, PKR 1 billion has already been raised in Pre-IPO round in April 2025. The profit rate will be set at a positive spread of 20 basis points over a base rate which will be over and above the base rate of three-month Karachi Interbank Offered Rate (KIBOR).
The growing popularity of these instruments in Pakistan highlights a broader shift towards Islamic finance in the country’s evolving economic landscape. K-Electric’s Retail Sukuk investors will not only see a relatively higher profit rate but also have the option of offsetting their electricity bills on an opt-in basis (only eligible investors).
An important point to understand is that investing in a Sukuk is fundamentally different from traditional lending. In this case, your investment is not a simple loan — it represents a share in the underlying assets and operations of K-Electric. This means that as an investor, you are directly contributing to the infrastructure that powers homes, businesses, and industries across Karachi. You are becoming a stakeholder in the city’s energy future, supporting a system that quite literally keeps the lights on and fuels progress.
The introduction of such a Shariah-compliant financing option comes at a crucial juncture when Pakistan’s energy infrastructure demands substantial investment to meet growing industrial and residential needs. This innovative Sukuk issuance by a major utility demonstrates how power companies can leverage innovative options to diversify its investor pool and move away from the ‘back bending’ circular debt.
Understanding this financial innovation is crucial for the broader utility sector and the private sector in the country at large. Sukuks, while often compared to conventional bonds, represent a fundamental shift to interest-free transactions. The positive implications of the development of this Islamic Bond market for Pakistan’s broader infrastructure sector are significant. As utilities demonstrate the viability of Sukuk financing, other infrastructure operators in sectors such as telecommunications, water, and transportation may follow suit. This could lead to a more diverse and resilient financing landscape across Pakistan.
Islamic financing is bringing about financial transformation as it represents more than just capital raising. It signifies a move away from interest-based financing and it also opens up new avenues of obtaining financing from ethical Shariah-compliant investment seekers.
Imagine investing in an instrument where you do not just own a piece of paper but are a partner in the provision of a service or in running a business – this is the fundamental appeal of KE Retail Sukuk.
Reference Link:- https://propakistani.pk/2025/08/16/pakistans-power-sector-gains-strength-with-first-retail-sukuk/