DUBAI: Dubai-listed National Central Cooling co (Tabreed) has bought an 80 percent stake in Emaar Properties’ Downtown Dubai district cooling business for AED2.48 billion ($675 million), the companies said.

Emaar will keep a 20 percent share in the business through a long-term partnership with Tabreed, they said in a joint statement.

Emaar said it had decided to sell the cooling business because it was not related to its core operations in property development.

The deal involves four plants near the Burj Khalifa, the world’s tallest skyscraper. District cooling firms deliver chilled water via insulated pipes to cool offices, industrial and residential buildings.

The downtown district cooling business, through a long-term concession, will provide up to 235,000 refrigerated tons of cooling to the area which includes the Burj Khalifa and the Dubai Mall shopping center.

“It’s the biggest integrated district cooling scheme in the world in the biggest district cooling market in the world, which is Dubai, so we really went after the crown jewel of the crown jewel of district cooling acquisitions,” Khaled Abdullah Al-Qubaisi, Tabreed chairman, said in an interview.

He said the deal had attracted a lot of interest from international companies and infrastructure funds. “A lot of people were vying for this asset, because of how important it is.” 

The deal comes during a two-week lockdown in Dubai that began on Saturday to contain the spread of the coronavirus.

Hotels have shut operations due to a collapse in demand, while a de facto overnight curfew has been put in place to disinfect public areas by spraying streets, parks and public transport facilities.

“When we were looking at this deal we really took extremely conservative assumptions about growth,” Al-Qubaisi said. 

“Even if you look at a six-month interruption, it doesn’t affect us a lot. All those public areas that are shut down right now are still consuming cooling and need to be cooled.”

Tabreed also sees growth coming from Saudi Arabia, where it operates through its subsidiary Saudi Tabreed, as the country builds new cities near the Red Sea, Qubaisi said.

“Saudi Arabia is probably going to be the largest district cooling market in the world in a number of years and the penetration of district cooling there is extremely low, below 10 percent,” the chairman said. 

“There’s new cities being built in the Red Sea, Neom (a mega business zone), that’s a lot of business potential for us.”

In May last year sources had said that Emaar Properties had hired advisers, including Standard Chartered, to handle the sale of its district cooling business.

Tabreed, whose biggest shareholders are Abu Dhabi state fund Mubadala Investment Company and France’s Engie SA, said it had new bank facilities to finance the transaction.

Reuters