Asia’s largest warehouse developer is teaming up with state-owned insurer China Life to form a new RMB 10 billion ($1.6 billion) value-add fund targetting logistics opportunities in China.
The vehicle marks the first China value-add fund for Singapore-based Global Logistic Properties (GLP), according to an announcement. Subsidiary GLP China is the asset manager and will contribute seed assets to the venture, which will focus on acquiring completed logistics and industrial properties across the country.
Mainland insurance giant China Life is the sole investor in the fund, called GLP China Value-Add Venture I. The deal will expand GLP’s fund management platform to $46 billion, representing a 56 percent annual growth rate since 2011. The Hong Kong arm of M3 Capital Partners Limited acted as exclusive financial advisor to GLP in the formation of the vehicle.
GLP is the leading warehouse provider in China with some 30 million square metres of modern sheds completed or in development across 38 submarkets.
Warehouse Giant Eyes Completed Assets in China
“This is a very significant transaction for GLP,” commented Teresa Zhuge, Vice Chairman of GLP China. “It is consistent with several key elements of our strategy including recycling assets and further growing our fund management platform. Demand from institutional investors to partner with GLP continues to be strong and we plan to establish additional new income funds in China.”
The company has previously set up two China funds, the first of which – China Logistics Fund I (CLF I) – was formed in November 2013 with investment from a group of global institutions, targetting $3 billion of assets under management.
The next in the series, CLF II, closed in May 2015 after bagging $3.7 billion of equity commitments from seven global institutions including national pension and sovereign wealth funds. The fund is expected to reach an investment capacity of $7 billion when fully leveraged.
GLP said it plans to continue its capital recycling strategy, after selling off and reinvesting the proceeds from nearly $8.1 billion of assets globally over the last six years. The firm completed a privatisation process last month by delisting from the Singapore exchange.
China Life Boosts Its Bet on Sheds
“The logistics industry is a key cornerstone of China’s economy while GLP has a proven track record and reputation for execution,” China Life said in the statement announcing the newest fund. “We believe in the long-term fundamentals of the industry and look forward to partnering alongside GLP to further advance the logistics ecosystem in China.”
China Life is a long-time investor in GLP both in China and abroad. In February 2014, an anonymous investor believed to be China’s largest insurance company joined Bank of China Group Investment and private equity firm Hopu Funds in a $2.51 billion investment in GLP. Through the deal, the investors took a 34 percent stake in GLP China and ploughed $163 million into the parent company. China Life bills itself as the mainland’s largest commercial insurance group.
Then in late 2015, the company notched its then-largest overseas investment by helping GLP acquire a US logistics portfolio from Denver-based Industrial Income Trust. China Life committed more than $1 billion to buy a 30 percent stake in the 58 million square foot (5.4 million square meter) warehouse horde.
At a news conference in November, China Life vice president Zhao Lijun said the Beijing-based company would boost investment in logistics opportunities in China, among other strategic and emerging sectors.