The UAE district cooling companies should follow the trend of merger and acquisitions popular among the Emirati banks, in order to benefit from consolidation and economies of scale, said an industry expert.

This strategic step will lead to cost savings, maximisation of branch network performance as well as help in realising profit efficiency in the long run for banks, remarked Ahmad Bin Shafar, CEO of Emirates Central Cooling Systems Corporation (Empower), a major player in the Middle East district cooling sector.

'While for the industry as a whole it means enhancing UAE’s position as an ideal financial hub in the region,' Bin Shafar stated.

Linking this merger to the district cooling industry in the UAE and the Gulf, Bin Shafar called for similar mergers and acquisitions across the globe.

'Most of the countries in the world have experienced M&A in their banking sector where major banks around the world are being involved in this activities for the benefits of economies of scale.'
 
'The same merger principle can be applied to DC companies, because the higher the production the lower is the cost,' he noted.

According to him, key players in the district cooling industry in the UAE and the Gulf have succeeded in building a world-class district cooling infrastructure.

'The demand has risen rapidly in the last couple of years which makes it really profitable for key players to consolidate their activity to serve customers with greater efficiency and lower costs by combining their resources,' he noted.

Bin Shafar also called upon regional and local banks to enhance their funding to district cooling industry which is considered one of the safest industries in terms of risks and return on investment.

He said that if banks show reluctance to invest in this sector they are losing a precious opportunity to invest in a promising and safe utility industry.

Bin Shafar said he hopes to see more banks in the Gulf region go for mergers and acquisitions to achieve significant growth in their operations and minimize their expenses.-TradeArabia News Service