Dubai: Tabreed, the utility company, is picking up an 80 per cent stake in Emaar’s Downtown Dubai district cooling services for Dh2.48 billion. Emaar retains the other 20 per cent.
The long-term deal will “exclusively” provide up to 235,000 RT (refrigerated tonnes) of cooling to the master-development, which includes the Burj Khalifa, Dubai Opera and signature high-rises.
This is the biggest corporate deal in the UAE this year. It had been in the works for some time, but that the deal still went ahead despite the overhang of COVID-19 and its impact on the local economy is noteworthy. And as a top Tabreed official said, the funds are "being wired as we speak".
Only the long-term in mind
Bader Al Lamki, CEO of Tabreed, in a telephone interview said: “Sure, the timing of the deal could have happened in better circumstances… but this was done with the long-term in mind.
“We had an opportunity to take a significant position in the world’s largest district cooling operations right in the heart of Dubai… and we did it, even though we are mindful of the short-term conditions.
“The financing is fully secured – we have managed corporate debt from HSBC and also a syndication.”
The deal was done with the long term in mind
The district cooling scheme currently provides 150,000 RT of contracted capacity through a network that distributes chilled water produced in three interconnected district cooling plants. A fourth plant that is currently under construction.
In a statement on Dubai Financial Market, Khaled Al Qubaisi, Chairman, said: “This is a truly transformational transaction for the company, accelerating our growth trajectory and consolidating our position in Dubai.
“This acquisition, in the world’s largest district cooling market, is a further testament to our financial strength. We expect our enhanced presence within the Dubai market to further enable us to reach our long-term objectives.”
Going big in Dubai
The fourth district cooling plant at Downtown is currently under construction and should be handed over to Tabreed before year-end. The transaction, incidentally, raises Tabreed’s profile in Dubai from being the fourth-ranked player to the second spot, according to the CEO.
On whether Dubai would constitute the biggest part of its growth going forward, Al Lamki said: “We are a company with a presence in six nations. We have the appetite to grow the business.
“The plan is to cement our existing foothold in the markets we operate in and explore other geographies - simultaneously. There’s India, where we already have a presence, Egypt, Kuwait. Wherever the density of population is there or new capital are being built, we can see opportunities.”
Tabreed has over the years built up a solid Abu Dhabi presence through handling Etihad Towers, Yas Island, Aldar HQ, World Trade Centre Abu Dhabi, Cleveland Clinic Abu Dhabi and The Sheikh Zayed Grand Mosque.