Tabreed bullish on India as it also presses forward with Middle East expansion

Exclusive: Dubai-listed district cooling company is looking at acquisitions and development of greenfield projects in Asia’s third largest economy

Tabreed's cooling plant on Yas Island in Abu Dhabi. The Dubai-listed company aims to expand in India. Photo: Victor Besa / The National

The National Central Cooling Company, better known as Tabreed, is bullish about growth in India and is looking at acquisitions and greenfield projects to expand in Asia’s third largest economy.

Last year, Tabreed formed a new holding company with the World Bank’s International Finance Corporation (IFC) to invest up to $400 million in the next five years to expand in India.

As part of the agreement, Tabreed India, currently a wholly owned unit of Tabreed, will be transferred to a new holding company established in Singapore, in which Tabreed will hold a 75 per cent stake and IFC 25 per cent.

The partners are targeting a portfolio of more than 100,000 refrigeration tonnes of cooling capacity by 2026 as they aim to serve industrial, commercial and retail developments in the country.

India, the world's second most populous country, is “a huge market that potential is beyond what we expected in initial stages”, Khalid Al Marzooqi, chief executive of Tabreed, told The National in an interview.

“India is setting up itself to be a major hub in the IT business as well as pharmaceuticals ... and that's one of the cooling intensive industries that require a lot of district cooling. Another market which is coming up is the food storage.”

"There's a large wastage in agricultural product sales due to the fact that the storages are not in convenient places or not centred in a way in hubs that can be easily exported."

The company is looking for new opportunities in Hyderabad, a major IT hub in southern India, as well as in Chennai.

“We have a couple of projects in the pipeline ... in evaluation stage right now,” Mr Al Marzooqi said, without disclosing further details.

The deals will be financed through a mix of debt and self-funding but “depends on the nature of each deal”.

District cooling firms deliver chilled water through insulated pipes to cool offices as well as industrial and residential buildings.

The world’s second-most populous country and one of the top polluters, India has set a target of achieving carbon neutrality by 2070, which is expected to support technologies including district cooling that help in lowering power consumption and reduces emissions to protect the environment.

Tomatoes in crates along a street at the Azadpur wholesale market in New Delhi, India. Tabreed expects to grow its business in India. Bloomberg

District cooling on average uses half the power consumed by conventional cooling methods.

Tabreed currently owns and operates 86 plants across the GCC — 75 in the UAE, three in Saudi Arabia, seven in Oman and one in Bahrain — in addition to other international projects.

The company has been rapidly expanding its operations across the region to boost its portfolio. It announced a number of new deals in the past two years in the UAE and across the Gulf region.

In 2020, Tabreed bought a majority stake in Emaar Properties' Downtown Dubai district cooling business for Dh2.48 billion ($675m). The deal, financed through a corporate loan, helped the company snap up an 80 per cent stake, with Emaar retaining the balance under a long-term partnership deal.

It also bought two district cooling units on Saadiyat Island in Abu Dhabi from Aldar Properties in a Dh963m deal to boost its portfolio in the UAE.

Last year, Tabreed signed an agreement with master developer Miral to provide district cooling services at SeaWorld Abu Dhabi marine life theme park on Yas Island.

The company's other deals include the acquisition of a new district cooling plant in Oman from Al Mouj Muscat, a joint venture between the country's government and UAE property developer Majid Al Futtaim to double its capacity in the sultanate.

Khalid Al Marzooqi, chief executive of Tabreed. Photo: Tabreed

Tabreed also took full ownership of the operator of the district cooling unit that serves Al Maryah Island in Abu Dhabi after it bought an additional 50 per cent stake for Dh311.5m last year.

The company, which reported a 3 per cent increase in its first-quarter profit, will continue to expand in the UAE, its main market as well as across the Gulf region and Egypt, Mr Al Marzooqi said.

In Egypt, Tabreed is currently partnering with the Egyptian Company for Energy and Cooling projects and Marakez for Real Estate Investment Company, to provide district cooling services to the new district five mall (D5M) in east Cairo as it expands into the Arab world's most populous country.

“Egypt is a large market that actually has potential as large as India or even beyond. We are in the construction phase of one of the district cooling for the mall in district five in Egypt. And we are very close to even closing some future deals," he said, adding the company might commission its first plant in the country “by last quarter of this year or maybe before”.

Tabreed also plans to enter new markets in North Africa and Kuwait, Mr Al Marzooqi said.