Tabreed expects low double digit returns from Emaar deal

Chairman said $675m acquisition is a solid investment because the cooling industry is not affected by pandemics like Covid-19

Abu Dhabi-based cooling giant Tabreed is expecting low double digit returns from its $675 million acquisition of 80 percent of Emaar Properties’ district cooling business in March, according to chairman Khaled Al Qubaisi.

The deal will see the DFM-listed company provide its service to developments including the Burj Khalifa and Dubai Mall, the world’s tallest tower and shopping mall, respectively. It had signed a credit facility arranged by HSBC Bank Middle East to fund the transaction.

Speaking toArabian Business, Al Qubaisi said the deal is a solid investment because the cooling industry is not affected by pandemics like Covid-19 as it provides a basic service for consumers in the UAE.

“Usually infrastructure projects like this, investors look for a high single digit to a low double digit return. This is what the facility investors look for and that commenced because at the end of the day, it’s a solid investment. At the end of the day, it doesn’t get affected, your income won’t go minus one,” he said.

The majority of Tabreed’s business relies on capacity charges, where a set fee is charged whether customers use the service or not, meaning its business is not disrupted by financial challenges. The wholesaler counts government entities with strong balance sheets as the majority of its customers.

It currently boasts 72 plants across five GCC countries, including projects in the UAE, Bahrain, Oman, Qatar and Saudi Arabia, and is looking to expand in existing markets like Saudi and Egypt.

“We currently operate in six different countries. We’re number one in every market we operate in. Dubai was the exception, we were the fourth player there. Now, this year, we’re the second largest. We continue to plan to expand in Dubai and other markets to strengthen our position there,” Al Qubaisi said.

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