GIC to Invest in $2B GLP China Fund Less Than One Year After Selling Warehouse Builder

Global Logistic Properties is teaming up with its former owner GIC to create a $2 billion value-add fund for acquiring logistics properties in mainland China, the company announced on Tuesday.

This is GIC’s first investment with Asia’s largest warehouse operator since it sold off its 37 percent controlling stake in GLP last year. GIC hasn’t announced the value of its stake in the new venture.

“This fund provides long-term capital to further strengthen our dominant network in China,” GLP CEO Ming Mei said in a statement. “We continue to see significant customer demand for our integrated logistics solutions and look forward to continuing to build our relationship with GIC.”

GLP Raises Capital to Expand Mainland Portfolio

This is the second China value-add venture for the Singapore-based developer this year. In February, the company launched its first China value-add fund, a RMB 10 billion venture with China Life Insurance.

Like the first venture, the second China value-add fund is set up to invest in logistics properties in China. It is also the second time this year GLP is using a venture with a single investor to expand its logistics holdings in mainland China, where its portfolio of properties is currently worth about RMB 20 billion. According to GLP, the company now manages more than $50 billion worth of assets and 30 million square metres of modern sheds.

Unlike the renminbi-denominated China Life fund, the two Singapore firms went with a US dollar denomination for their new venture. When asked about the company’s fundraising strategy, a GLP spokesperson told PERE that each of its funds are “structured specifically for the needs of the institutional partner that is investing alongside GLP.”

Having sold off its stake in GLP for $11.6 billion last year in Asia’s largest privatization deal, GIC may now be looking to once again leverage GLP’s position in China’s logistics property market amid rapid growth in domestic consumption.

“We believe high consumption growth, especially of e-commerce, will continue to drive demand for high-quality logistics properties in China,” said GIC chief investment officer Lee Kok Sun in a statement. “This venture will enable us, as a long-term value investor, to capitalise on the structural growth of the logistics sector in China.”

GIC Keeps the Faith With Former Company

A year after GIC’s divestment, its decision to get back into business with GLP may come as a surprise after Mei led a mainland-backed buyout of the Singaporean sovereign wealth fund’s controlling stake in the company in a prolonged sales drama. After a prolonged sales process that included revelations of Mei overseeing investments by GLP into companies where his own venture fund already held a stake, Nesta Investment Holdings, a consortium led by Mei, which also included China Vanke, Hillhouse Capital and Fang Fenglei’s Hopu Investment Management eventually took control of the warehouse developer.

Mei’s insider bid is believed by some analysts to have scuttled potentially lucrative bids from other parties, something GIC representatives were said to have complained about at the time. Blackstone, CPPIB and TPG all walked away from the sale. The deal still provided a 25 percent premium over the share price, and GIC endorsed the deal in a public statement.