By Hadeel Al Sayegh and Federico Maccioni

DUBAI, April 18 (Reuters) - KKR KKR.N and I Squared Capital are among global asset managers bidding for a district cooling business owned by Abu Dhabi's Multiply Group, part of a $1.5 trillion empire overseen by one of the UAE's most powerful Sheikhs, three sources said.

District cooling plants, which deliver chilled water via insulated pipes to cool offices, industrial and residential buildings, have been developed as a more economical and environmentally friendly alternative to air conditioning.

The Middle East's biggest alternative investment manager, Investcorp, is among the potential suitors for PAL Cooling Holding $(PCH)$, the three people with knowledge of the matter told Reuters, declining to be named as the details are not public.

The asset managers join a race that includes CVC CVC.AS which is working with Engie ENGIE.PA-backed National Central Cooling Co TABR.DU, also known as Tabreed, in a deal that could be worth around $1 billion, said the people.

Abu Dhabi energy and utilities firm TAQA TAQA.AD is also eyeing the deal, which is approaching its second round with potential buyers expected to put forward binding bids next month, they said.

KKR, Investcorp and Taqa declined to comment, while Multiply, I Squared Capital, CVC and Tabreed were not immediately available for comment.

Reuters reported last month that Tabreed was working with Citi on a potential bid.

The interest in PCH underscores how buyout groups are now looking at local investment opportunities in the Gulf as governments in the region implement ambitious programmes to diversify their economies from oil. Before, equity firms would raise money there to invest elsewhere.

Last week, KKR became the latest asset manager to announce plans to build a team in the region to go after Gulf deals.

Multiply is controlled by IHC IHC.AD, whose chairman is Sheikh Tahnoon bin Zayed Al Nahyan, the UAE's national security adviser and brother of the country's president who controls a sprawling business empire including two sovereign wealth funds.

Private equity funds worldwide secured around $680 billion in 2024, a 30% decrease from about $966 billion raised in 2023, S&P Global Market Intelligence data said in January.

(Reporting by Hadeel Al Sayegh and Federico Maccioni; Editing by Emelia Sithole-Matarise)

((Federico.maccioni@thomsonreuters.com; +971 527370852;))