An affiliate of private equity giant Warburg Pincus has led a $180 million Series D investment in business park operator D&J China, as the Shanghai-based company builds up its industrial property platform across key cities in the mainland.
The capital infusion follows previous rounds of investment by Warburg Pincus, which co-founded D&J China in 2014 and backed its new, RMB 10 billion ($1.45 billion) China real estate fund launched last year. The funding comes two weeks after the private equity firm announced a $183 million investment in a Shanghai-based rental apartment platform, adding to Warburg Pincus’ existing commitment of $3 billion to Chinese real estate companies.
Funds to Expand D&J China’s Growing Portfolio
“With the growing demand for modern business parks, R&D facilities and headquarter campuses in China, there are substantial growth opportunities for a dedicated industrial developer and operator like ourselves,” commented Sun Dongping, chairman and CEO of D&J China in a statement. “This new round of financing provides the funding capacity for the company to further increase the size of its portfolio in the tier one cities and other strategic markets in China.”
Co-founded by Warburg Pincus and Sun, D&J China has rapidly built a portfolio of over 2 million square metres of properties in operation and under development in Beijing, Shanghai, Shenzhen and Nanjing. The company, a majority-owned subsidiary of Warburg Pincus, focusses on developing business parks and suburban offices, as well as R&D centres, modern manufacturing and data centre facilities.
Major projects include a 110,000 square metre corporate park in Shanghai’s Zhangjiang High-Tech Park and a 28,000 square metre building in BEZ • IT Industrial Park in Beijing’s Zhongguancuan. The developer’s roster of tenants includes Johnson & Johnson, Shell, Broadcom, Asiainfo and other top multinationals and high-tech firms.
Last year, the developer announced a goal of growing its assets to over 5 million square meters in the following three to five years with a total asset value of RMB 45 billion by 2020.
“We are very pleased with what D&J China has achieved in just three years since its inception,” said Ellen Ng, managing director of Warburg Pincus in the statement. “We continue to be very optimistic about corporate demand for dedicated business and IT parks, R&D facilities and multi-functional “flex” spaces in good locations with strong accessibility.”
Industrial Developer Seeks Partners and Capital
Warburg Pincus and Sun committed $200 million to D&J China in a Series B investment in February 2016, following the company’s original $200 million capitalisation in 2014. Warburg Pincus declined to provide information about the company’s Series C round, citing confidentiality.
Last December, D&J China launched the D&J Zhiyan Equity Investment Fund in partnership with mainland financial institution AVIC Trust. The funding vehicle, which has an initial capitalisation of $1.45 billion, was set up to invest in industrial infrastructure including business parks and R&D parks to production facilities.
Earlier this year, the company formed two additional funds with domestic institutional investors, bringing its total assets under management to over RMB 16 billion ($2.4 billion).
D&J’s investment fund activity was preceded in April of last year by the company acquiring a 40 percent stake in value-added real estate investment firm Kailong. Shanghai-based Kailong holds an extensive portfolio of business parks around the mainland commercial hub.
US PE Giant Boosts its China Presence
New York-based Warburg Pincus has over $44 billion in private equity assets under management and has become one of the most active US private equity players in real estate markets in China and other parts of Asia. As part of its more than $3 billion in investments in more than 30 property firms in China, Warburg Pincus also teamed up with D&J’s Sun and Jeffrey Shen in 2011 to found warehouse developer e-Shang, which has become part of regional logistics heavyweight e-Shang Redwood (ESR).
Earlier this month, a Warburg Pincus affiliate committed $183 million to Nova Property Investments, a Shanghai-based rental housing owner and operator, which Warburg Pincus co-founded with Chinese entrepreneur Qian Wang in early 2015.