The National Central Cooling Company, better known as Tabreed, is looking at markets including Vietnam, Thailand, and Indonesia to expand its footprint in Asia as it anticipates a surge in demand for cooling services in the region.
The company, which has signed agreements to provide district cooling services in India and Egypt – outside its core Gulf market, would consider “organic” and “inorganic” growth opportunities including mergers and acquisitions, its chairman, Khaled Al Qubaisi, told The National.
“If the right opportunities present themselves, we'll be looking at [mergers and acquisitions] as well. In the end, it's about the best returns we can achieve for our shareholders,” Mr Al Qubaisi said.
Tabreed, one of the largest utility companies in the Middle East, has been rapidly expanding its operations across the Mena region.
The company is optimistic about growth in India and is looking at acquisitions and greenfield projects to expand.
In 2021, it formed a holding company with the World Bank’s International Finance Corporation to invest up to $400 million over the following five years for its expansion in India, the world's fifth-largest economy.
“In addition to growing our portfolio in India, we are exploring opportunities in South-East Asian countries,” Mr Al Qubaisi said.
“Rising populations, warmer temperatures and global commitments to reducing carbon emissions are driving an increase [in demand] for district cooling,” he added.
The global district cooling market is expected to increase to $63.2 billion by 2033, from $29.2 billion currently, recording an annual growth of 8 per cent, according to Future Market Insights.
Tabreed reported a 10.5 per cent rise in third-quarter revenue, driven by new connections and higher demand from existing customers.
The company, which launched a green finance framework last year, is “really solid” in terms of its cash position and can manage a lot of its growth without raising additional debt, Mr Al Qubaisi said.
He declined to comment on Tabreed’s plans to issue green bonds next year but said that green finance would play a key part in supporting the company’s growth.
“The framework enables the company to issue green bonds, loans, and sukuks with resulting net proceeds to be used for financing or refinancing eligible green projects, which includes our core business,” Mr Al Qubaisi said.
“We'll update the market at an appropriate time.”
The market for green and sustainable bonds and sukuk is booming specifically in GCC economies, as governments in the oil-rich economic bloc push to meet their net-zero commitments.
Total GCC green and sustainable bond and sukuk issuances last year reached a record $8.5 billion from 15 deals, compared with $605 million from six deals in 2021, amid increased participation from banks and government-related entities, data from Bloomberg’s Capital Markets League Tables showed.
Mr Al Qubaisi’s remarks come just over a week before the Cop28 climate conference begins in Dubai.
Countries are being asked to commit to a global pledge requiring at least a 68 per cent reduction in cooling-related emissions by 2050, according to reports.
District cooling involves producing chilled water within a centralised energy plant and distributing it to buildings through underground pipes. It is considered environmentally friendly, energy efficient and economical.
“District cooling on its own will reduce energy consumption no matter what,” Mr Al Qubaisi said.
The increasing proportion of renewable energy in the electricity mix has improved the sustainability of district cooling.
“In India, for example, renewable energy is actually cheaper than conventional energy. It is cheaper to get energy from solar plants in India than from gas-fired plants [and] you don't even need subsidies to do that,” Mr Al Qubaisi said.