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France's Engie to buy 40% stake in UAE's Tabreed for $762 million

Tabreed will become one of Engie's main regional development platforms

Reuters  |  Abu Dhabi 

Source: Twitter

SA has agreed to buy a 40 per cent stake in Dubai's National Central Cooling Company (Tabreed) and help drive the company's expansion in emerging markets such as Turkey, and

is buying the stake for 2.8 billion dirhams ($762 million) from state investor Investment Co, making it Tabreed's second largest shareholder after Mubadala, which will retain 42 per cent, the two said on Monday.

Mubadala's stake is held in a combination of equity and mandatory convertible bonds (MCBs). Under the deal, it will convert its MCBs into shares equivalent to a 40 per cent stake that will be transferred to at 2.62 dirhams per share.

Shares in Tabreed, which provides cooling for buildings and other infrastructure, surged 15 per cent to hit their daily limit of 2.12 dirhams at 10.48 am (07:48 GMT).

Reuters reported in November that was considering the sale of a least part of its stake.

"is a company with a strong growth trajectory and will benefit from Engie's experience as an operator of world-class utility businesses," Homaid al Shimmari, deputy group chief executive of Mubadala, said in a statement, adding that would remain a significant, long-standing shareholder.

will become one of Engie's main regional development platforms and the French company is expected to lead rapid growth for in new emerging markets such as India, and Turkey, the statement said.

The two have also agreed certain cooperation arrangements designed to support Tabreed's growth strategy and management team, they said.

The deal is expected to close in the third quarter of 2017.

first invested in in 2004 and by 2008 had put in 800 million dirhams. Then in 2009, injected some 2.9 billion dirhams as part of Tabreed's re-capitalisation.

spokesman Brian Lott said had returned 1.9 billion to since 2009 through buybacks, dividends and coupons, leaving an investment of about 1.8 billion dirhams.

"With this 2.8 billion dirhams deal with Engie, effectively made a gain of 1 billion dirhams on its investment," he said.

Mubadala, which recently merged with fellow state fund Petroleum Investment Co, has stakes in including private equity firm Carlyle and Brazilian iron-ore port terminal Porto Sudeste.