e-Shang Redwood announced today that the State Oil Fund of Azerbaijan (“SOFAZ”) has agreed to invest $100 million in the Asian logistics real estate developer and fund manager’s Japanese projects.
The investment by the central Asian fund is the latest financial victory for the fast-growing warehouse builder and comes as the Warburg Pincus-invested company prepares for an anticipated multi-billion dollar initial public offering later this year.
“We are excited to build upon the relationship with SOFAZ, the Sovereign Wealth Fund of the Republic of Azerbaijan,” Charles de Portes, President of ESR and Stuart Gibson, Co-CEO and head of its Japan operations said in a joint statement. “Over the last 3 years, SOFAZ has displayed both insight and acumen through their impressive series of Asian-focused investments and selection of product classes witnessing the highest demand and growth in the region.”
Meeting Japan’s E-Commerce Needs
The investment is SOFAZ’s first venture into Japan’s warehouse market which has been propelled in recent years by rapid growth in e-commerce and the expansion of third-party logistics companies. Japan is the fourth-biggest market for e-commerce sales globally, behind China, the US and the UK, according to research by JLL, and the industry is predicted to nearly double in size in Japan by 2020.
“This investment is consistent with our strategy of identifying through rigorous diligence and then committing to the most compelling and focused strategies by geography and asset class,” said Shahmar Movsumov, Executive Director of SOFAZ. “Development of state-of-the-art logistics real estate in Japan, which has witnessed increasing levels of demand associated with growth of e-commerce industry particularly in Tokyo and Osaka is such a strategy and complements well our existing real estate portfolio.”
Funding Follows Plans for $1 Bil Facility
Just last month, ESR, which, in addition to Warburg Pincus, counts CPPIB, APG, PGGM and Goldman Sachs among its investors, announced plans for significant expansion in Japan. The developer, which already has 10 Japanese projects in its portfolio, said on January 20th that it will develop one of the country’s largest single site distribution centres – a 229,000 square metre facility in Chiba prefecture outside of Tokyo.
The warehouse builder’s Azerbaijani connection comes soon after ESR raised three times as much from a consortium of mainland investors at the beginning of the year. Top tier Chinese finance firms clubbed up to put $300 million into ESR in deal announced in early January. The deal was widely-regarded as pre-IPO financing, with sources familiar with the company’s plans expecting a stock market listing to happen during 2017.