e-Shang Redwood (ESR) has closed on a $300 million round of investment led by a consortium of mainland investors as the Asian logistics developer prepares for a potential 2017 initial public offering.
The company, which was formed last January by the merger of Shanghai-based e-Shang with regional player The Redwood Group, received the pre-IPO investment from a group led by GF Investments (HK), Huarong International, Huarong Rongde, SPDB International, China Everbright Limited, Everbright Securities and CMBC International, according to a statement released by ESR. The investors named are all top tier mainland finance firms.
Sources familiar with the planned public listing expect the offering to happen within 2017. Prior to the e-Shang Redwood merger, media reports had projected a $1 billion 2016 IPO for e-Shang as a solo act.
Ecommerce Growth Helps ESR Go Regional
ESR has leveraged the rapid growth of ecommerce in Asia to quickly build a platform of some 6.5 million square meters of projects owned and under development across mainland China, Japan and South Korea. Prior to this latest round of investment, the company’s success had already brought it the support of major institutional investors including Warburg Pincus, CPPIB, APG, PGGM and Goldman Sachs.
“Modern warehousing will continue to benefit from the rapid development of e-Commerce and the transformation of the retail sector in Asia and we believe ESR is well-positioned to further enhance its strong leadership position,” said Elyn Xu, Head of Structured Finance for GF Holdings (HK). Xu’s company is the Hong Kong affiliate of mainland-based brokerage GF Securities.
Investment Follows a Strong 2016 for Warehouse Builder
ESR’s leadership held out the investment as recognition of the company’s recent successes. “2016 has been a very strong year for us with the completion of the Redwood merger, the substantial increase in development starts in our core markets of China, Korea and Japan on the back of robust market demand from our best-in-class tenant relationships and the establishment of new financing (both equity and debt) institutional relationships in each of our markets,” noted Jeffrey Shen, Co-CEO of the warehouse builder.
e-Shang was co-founded by Shen, Sun Dongping and Warburg Pincus in 2011 and focused primarily on mainland projects before launching a South Korean joint venture in 2014. Merging with The Redwood Group, which had been founded in 2006 by Charles de Portes and Stuart Gibson, allowed the expanded company to include Japan in its platform as well as expanding its China portfolio.
In addition to the company’s current 6.5 million square metre platform, ESR says it has another 6 million square metres of projects in the pipeline.
The investment by the mainland consortium comes just six months after leading Chinese institutional investor Ping An Real Estate committed more than $300 million to ESR projects in Japan. China’s sovereign wealth fund has also shown a healthy interest in logistics opportunities lately, with Asian logistics leader GLP last month announcing that it had hired JP Morgan to review a possible sale of the warehouse developer following reports that CIC had offered to buy the $6 billion shed builder.