Anbang, Sino-Ocean Take Cornerstone Stakes in $433M China Warehouse IPO

Mainland warehouse developer China Logistics Property Holdings, which was formerly known as Shanghai Yupei Group, has pulled in cornerstone investments from Anbang Insurance and Sino-Ocean Group for a planned $433 million Hong Kong IPO, according to published reports.

Together the cornerstone investors plan to take up more than half of the 1.04 billion shares being offered in the Shanghai-based logistics developer, which is already backed by Carlyle Group of the US, and by Singapore’s Temasek Holdings.

China Logistics Property, which uses the acronym CNLP, has said that it plans to price the offering on July 8^th and begin trading of its shares on the Hong Kong exchange on July 15^th, according to offering documents cited in a Bloomberg report today. The mainland logistics real estate sector has been one of its most consistent performers in recent years with warehouses averaging leasing yields of 7-8 percent while other sectors have shown varying returns.

Sino-Ocean Leads Cornerstone Investors

Anbang, the controversial mainland insurer led by entrepreneur Wu Xiaohui, has agreed to take a 4.99 percent stake in CNLP (whose name bears a perhaps non-coincidental likeness to market leader GLP), which would translate into a $55 million investment if the shares are priced at the mid-point of the developer’s HK$2.55 to HK$3.25 indicative pricing, according to Bloomberg. Sino-Ocean, which has recently diversified its mainland property empire into the US, has signed up for a 9.99 percent share in CNLP.

By bringing its IPO online now, CNLP is braving the Brexit aftermath in global financial markets, but is perhaps bringing its assets to market before other, potentially sexier players begin offering shares in their warehouse platforms on public markets.

In a development first revealed on Mingtiandi, Warburg Pincus-backed warehouse builder e-Shang merged with the Redwood Group to form a pan-Asian logistics platform that is expected to pursue an IPO worth well over $1 billion sometime later this year.

Australia-based Logos Property has also been expanding rapidly in the last year, with the logistics developer, which had entered a $400 million joint venture with Ivanhoe Cambridge and CBRE Global Investors for its platform in Australia and China, opening its first two projects in southeast Asia this month.

Reports in March had indicated that China Logistics Property would seek at least $300 million in its initial listing, which is being coordinated globally by Credit Suisse Group, Deutsche Bank, Bank of America and AMTD Group.

Investing in the Future of Chinese Ecommerce

CNLP has been successful in attracting a high profile list of occupiers for its warehouses, particularly as China’s ecommerce sector – which grew by 33 percent last year – continues to gather steam.

Online marketplace JD.com is among the warehouse builder’s tenants, according to its website, as is mainland phone maker Xiaomi. Bosch, Itochu, Kerry Logistics and Siemens are also listed as CNLP clients.

Founded in 2000, Yupei has now built 40 logistics projects across China totalling between three and five million square metres of warehouse space, according to the company.

Although a $46 million investment in Yupei by Sam Zell’s Equity International in 2008 failed to produce an expected IPO some years back, Carlyle teamed up with real estate investment firm Townsend Group to create a $400 million joint venture with the developer in 2013.

Helped along by a booming ecommerce sector and the success stories of Global Logistics Properties and other investors in China’s logistics sector, Yupei founder Li Shifa went on to attract another $250 million in funding from Temasek Holdings and RRJ Capital in 2014.

The company now known as CNLP is planning to devote 89.5 percent of its IPO proceeds to pay down bank debt and convertible securities held by Carlyle, while just 5.4 percent of investors money will go toward developing new warehouses according to an offering term sheet.