Tabreed, CVC acquire PAL cooling: ADX-listed Multiply Group agreed to sell 100% of its district cooling arm PAL Cooling Holding to state-owned district cooling firm Tabreed and Luxembourg-based PE firm CVC’s infrastructure investment platform CVC DIF in a transaction valuing the business at AED 3.8 bn (USD 1 bn), according to two separate statements (here and here). The transaction is still subject to regulatory approvals.

The agreement includes eight concessions, including three long-term concessions in Abu Dhabi and five in Al Reem Island. The concessions are serviced by five existing district cooling plants, with some 182k RT capacity as of last December, with another plant under construction and three more in the planning phase. The plants and concessions are expected to have a total capacity of 600k RT.

Background: The transaction, first reported in March, is the latest sign of interest among global private equity firms in infrastructure and real estate in the UAE. This comes as the region as a whole sees an increase in investments in infrastructure projects, including district cooling plants — a more energy- and cost-efficient alternative to conventional cooling systems for a region that is highly dependent on air conditioning.

Expected impact: “The acquisition also serves to strengthen our already investment-grade status with safe, long-term concession agreements and assured future growth, evidenced by current and planned developments on Reem Island,” said Tabreed CEO Khalid Al Marzooqi. The acquisition is also expected to provide CVC DIF with exposure to a strategic segment of the UAE’s utilities sector, amid rising PE interest in regional infrastructure assets.

The money is earmarked to finance Multiply’s growth in core verticals: The transaction “reflects our ability to realise significant value from our assets while enhancing liquidity to fuel Multiply Group’s next phase of growth — both across our core verticals and on the global stage,” Multiply’s CEO Samia Bouazza said. Multiply had acquired PAL in July 2021.

Market reax: Multiply Group’s shares rose 2.6% to close at AED 2.41 yesterday, while Tabreed’s were up 1.8% to close at AED 2.84.

ADVISORS- Standard Chartered and Clifford Chance are advising Multiply Group, while Citi, Synergy Consulting, and White & Case are buy-side advisors.

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