UAE's Tabreed likely to issue more bonds in coming years, says CEO

District cooling company eyes further acquisitions as developers shed non-core assets

National Central Cooling Company PJSC (Tabreed), Dubai Plant on Shk. Zayed Road Image used for illustrative purpose.

National Central Cooling Company PJSC (Tabreed), Dubai Plant on Shk. Zayed Road Image used for illustrative purpose.

Tabreed/Handout via Thomson Reuters Zawya

Dubai-based National Central Cooling Company (Tabreed) could issue more bonds as it looks to fund acquisitions, including the purchase of district cooling units sold by real estate and infrastructure developers looking to offload non-core assets, its chief executive officer (CEO) told Zawya.

“[There] will be more and more opportunities coming to the market this year. Dubai Airport is one of them,” Bader Al Lamki said in a phone interview.

The state-owned Dubai Airports has reportedly appointed Standard Chartered as an advisor on the potential sale of a controlling stake in the district cooling plant of Dubai International (DXB). The business is valued at around $750 million, Bloomberg reported earlier.

Al Lamki said the airport opportunity is being “looked at” by Tabreed, and that it is one of many opportunities in the emirate that the company will consider in 2021.

The company told the Dubai Financial Market (DFM) on Thursday that no agreement regarding the asset serving DXB has been signed yet.

Al Lamki indicated that the trigger for issuing further bonds would be such expansion. “[Further bond issuance] is an option on the table we will exercise if need be. The trigger will be also the growth opportunities that we will be able to secure to the extent that we need to fund it beyond the balance sheet, we are keeping the option open and trying to keep a very good balance sheet.”

Tabreed acquired an 80 percent stake in Emaar Properties’ Downtown Dubai District Cooling business, the world’s largest district cooling scheme, in April- an acquisition worth 2.48 billion dirhams. Last year, it signed an agreement with Aldar Properties to acquire two district cooling facilities on Saadiyat Island.

“Over the past couple of years, investor confidence in Tabreed has continued to grow for sure, this was evidenced in our successful sukuk issuance in 2018,” he said.

Tabreed also issued a $500 million seven-year bond in October last year. Al Lamki said 95 percent of the investors in the bond were international, and that showed “the Tabreed story was known globally”.

Of the $500 million, Tabreed used $262 million to acquire the Saadiyat Island facilities last year, he added.

The company, which cools 49 stations of Dubai’s Metro system, is looking to tie up other contracts in Dubai in the months leading up to Expo 2020, the CEO added.

“Last year, we have expanded the relationship with [Dubai Metro] through an extension to the Nakheel Harbour station which is used in the Ibn Battuta Mall area. That particular one will have a line that goes to Dubai Expo. We will be collaborating on that front,” he said.

Saudi cooling market

There could be also opportunities in the Saudi Arabian market for the company which has increased its stake in Saudi Tabreed to 28 percent.

“We are seeing great momentum in demand for district cooling,” said Al Lamki of the Saudi market.

“There is a very ambitious vision that is being drawn out over there, the 2030 vision by the Crown Prince (Mohammed bin Salman). Those represent a number of very important greenfield developments, whether it is Qiddiya or Red Sea or NEOM, and the rest of those mega projects that are in the master planning phase. Through Saudi Tabreed, we are definitely showing a keen interest. We are definitely participating in any call for proposals.”

Last week Tabreed, which is part-owned by Abu Dhabi’s Mubadala and France’s Engie, reported a 16.5 percent increase in net profit for 2020 to 550 million dirhams.

(Reporting by Imogen Lillywhite; editing by Brinda Darasha)

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© ZAWYA 2021

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