November 3, 2016 / 2:35 PM / 3 years ago

Abu Dhabi's Mubadala weighs Tabreed stake sale-sources

* Weighs dilution or full sale - sources

* International investor preferred - sources

* Mubadala: Tabreed remains core investment

By Hadeel Al Sayegh and Tom Arnold

DUBAI, Nov 3 (Reuters) - Abu Dhabi state investment vehicle Mubadala Development Co is considering the sale of a least part of its stake in Dubai’s National Central Cooling Co (Tabreed), three sources familiar with the matter told Reuters.

Tabreed’s largest shareholder since it was part of a rescue effort following an economic slowdown in Dubai at the turn of the decade, Mubadala has been considering whether to offload part of its holding or, should a suitable investor show interest, its entire stake, one of the sources said.

The fund is not undertaking a formal sale process, but has sounded out investment bankers about whether they have clients that would be interested in a deal, two of the sources said.

In a statement, Mubadala said: “We don’t comment on market rumours or speculation. However, Tabreed is a core investment for Mubadala, and we will always be a long-term and significant shareholder.”

Tabreed did not respond to a telephone and email requests seeking comment.

Mubadala is assessing its portfolio of investments as it adjusts to operating in a lower oil price environment.

The fund holds 13.39 percent of Tabreed’s shares directly, plus 19.88 percent through an affiliate, according to Thomson Reuters data and Tabreed’s 2015 corporate governance report.

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

The fund, which swung to a substantial loss in the first half of 2016 on the back of lower commodity prices and weaker income from financial investments, in July agreed to sell an 80 percent stake in aviation services unit SR Technics to HNA Aviation.

Mubadala would prefer an international investor to acquire its holdings in Tabreed, one of the sources said.

Tabreed, which provides cooling for buildings and other infrastructure, in 2010 received a $354 million bridge loan from Mubadala to cover its financing needs as it reeled from the property crisis in 2009.

Tabreed in 2013 issued mandatory convertible bonds to Mubadala, which were mostly converted into shares in 2014. There remains an outstanding 201.97 million dirhams that has not been converted to equity, according to Tabreed’s latest results.

Shares of Tabreed closed on Thursday at 1.79 dirhams apiece, above the bonds’ conversion price of 1.6856 dirhams. (Additional reporting by Stanley Carvalho in Abu Dhabi)

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