Mainland builders D&J and New Ease, both backed by US private equity giant Warburg Pincus, have completed a “strategic merger” to form a combined real estate developer and fund manager with over $11 billion in assets under management.
The newly created firm, called DNE Group, commands more than 10 million square metres (107.6 million square feet) of gross floor area across logistics and cold storage, life science and manufacturing parks, urban redevelopment and data centres, Shanghai-based DNE said Thursday in a release.
DNE is headed by chairman and CEO Sun Dongping, the co-founder of D&J, New Ease and e-Shang, a precursor of Warburg-backed warehouse giant ESR. The new venture has attracted some top institutional investors, raising over $1.5 billion from Swiss private equity firm Partners Group, US private equity shop StepStone Group and US venture capital firm Sequoia Capital, among others. Sun and Warburg Pincus also chipped in capital for the funding round.
“This merger marks the establishment of a leading new infrastructure platform in China,” Sun said. “We have also set up a private equity investment platform to invest in high-growth tech-driven companies that complement our infrastructure ecosystem.”
New Economy Infrastructure
Founded in 2014, D&J is an industrial real estate platform with over $5 billion in assets under management across manufacturing parks, life science parks and IT parks. Key assets include Shanghai Jinchuang Plaza, an R&D building at Zhangjiang High-Tech Park; and Shenzhen D&J Innovation Park, an industrial park serving the Greater Bay Area.
D&J’s backers have included US-based Bain Capital Credit, which in 2019 committed $300 million to the developer focused on China’s major economic hubs of Beijing, Shanghai and Shenzhen.
Founded just three years ago, New Ease has amassed over 6.5 million square metres of logistics assets under management across China, springboarding from a $400 million initial investment by Warburg Pincus to later form joint ventures with JP Morgan Asset Management, Goldman Sachs Asset Management and Canadian pension fund manager QuadReal.
DNE said Thursday that the enlarged group would benefit from combining the investment and operational capabilities of D&J and New Ease “to create a best-in-class new economy infrastructure platform, providing a full range of integrated infrastructure solutions to new economy clients”.
The nascent company has made multiple strategic moves since the merger and continues to expand the portfolio in Tier 1 and select gateway cities in China, in addition to setting up several income-generating ventures with insurance firms, DNE said. A representative of Warburg Pincus declined to provide specifics on those activities when contacted Friday by Mingtiandi.
A wave of consolidation has hit Asia Pacific’s red-hot industrial sector, epitomised by the $5.2 billion proposed acquisition of Singapore’s ARA Asset Management by Hong Kong-listed ESR, whose shareholders approved the deal last month.
Upon completion of the transaction by the first quarter of 2022, ARA’s business — including Australian industrial developer Logos — will combine with ESR’s to form the enlarged ESR Group, driven by a new-economy real estate platform with over $50 billion in assets under management.
In April, ESR added 45 assets and 1.4 million square metres to its portfolio with the $2.9 billion acquisition of Australia’s Milestone portfolio from Blackstone as part of a joint venture with Singaporean sovereign wealth fund GIC, setting a mark for the largest-ever direct real estate sale Down Under.
In a pre-emptive strike, JD.com’s real estate division in September agreed to buy a controlling stake in Hong Kong-listed China Logistics Property Holdings for $513 million, giving the e-commerce giant an opportunity to beef up its portfolio of distribution centres amid consolidation and rising rents in the warehouse segment.