France’s Engie has signed an agreement with Abu Dhabi government-controlled Mubadala Development Company to buy a 40 per cent stake in National Central Cooling Company (Tabreed) and help the UAE-based utility provider’s regional expansion drive.

The deal involves converting all of Mubadala’s mandatory convertible bonds into shares. The investment firm will transfer stocks equivalent to a 40 per cent shareholding in Tabreed to Engie at a price of approximately AED2.62 a per share, which values the deal at AED2.8bn ($762m), Tabreed said in a statement to Dubai Financial Market (DFM), where its shares are traded.

Mubadala will retain the remaining shares and will remain the biggest shareholder in Tabreed ahead of Engie with an approximately 42 per cent stake. The transaction is expected to be completed in the third quarter of this year, the statement added.

Tabreed shares jumped 15 per cent, the maximum allowed one-day limit of increase, to AED2.12 at the close of trading on 19 June.

“This is a very positive development for Tabreed which underscores the progress made over the last several years,” Jasim Thabet, CEO of Tabreed was quoted as saying in the statement, adding that the company will benefit from Engie’s expertise in operations and business development which are the “cornerstones” of Tabreed’s expansion strategy across the GCC.

Tabreed operates 71 district cooling plants throughout the GCC. It delivers over 1 million refrigeration tonnes to key developments in the region including Abu Dhabi’s Al Maryah Island, Yas Island, Sheikh Zayed Grand Mosque, Dubai Metro, Dubai Parks and Resorts, and the Jabal Omar Development in Saudi Arabia.

Mubadala, which invested AED800m in Tabreed in by 2008 had to inject AED2.9bn in 2009 as part of the company’s recapitalisation. Mubadala had taken out AED1.9bn 2009 through buybacks, dividends and coupons, leaving an investment of about AED1.8bn in Tabreed.

“With this AED2.8bn deal with Engie, Mubadala effectively made a gain of AED1bn on its investment,” news agency Reuters quoted Mubadala spokesman Brian Lott as saying.