Keppel Launches First China Logistics Property Fund With $220M Commitment

Keppel Capital, the Temasek Holdings-backed asset management arm of Singapore’s Keppel Group, on Tuesday announced the creation of a logistics property fund to invest in developing high-quality assets in key logistics hubs in China.

Keppel Capital’s first China-focused logistics property fund has an initial equity commitment of RMB 1.4 billion ($220 million), with an option to upsize by a similar amount by the end of 2021. Wholly-owned subsidiary Keppel Capital China will serve as the fund’s investment manager.

The fund will leverage the experience, network and expertise of Keppel Group, as well as a leading Chinese logistics developer and operator, Keppel Capital said in a release.

“Driven by rising domestic consumption as well as e-commerce, China’s demand for quality logistics facilities is expanding rapidly,” said Keppel Capital CEO Christina Tan. “Through the fund and our collaboration with our local logistics property partner, we look forward to delivering modern logistics facilities for key cities in the Chinese market, while also generating attractive risk-adjusted returns for our investors.”

Joining the Family

Keppel Capital’s dedicated China logistics vehicle is the latest addition to a stable of funds that includes the Alpha series of pan-Asian real estate funds and a pair of data centre funds.

Traditionally, the group’s fund management division has deployed capital via regional vehicles investing across asset classes, although in recent years it has shown increasing interest in specialised ventures targeting fast-growing sectors.

Last October, Keppel Capital announced a first closing of $295 million for its Alpha Asia Macro Trends Fund IV, the fourth instalment in its pan-Asian value-add strategy. With a target size of $1 billion, the fund is aiming at opportunities across multiple asset classes in gateway APAC cities including its hometown of Singapore.

In December, the group followed up on the success of its 2016-vintage Alpha Data Centre Fund by launching Keppel Data Centre Fund II, which dropped the Alpha Investment Partners branding but retained the goal of pursuing opportunities in one of the world’s fastest-growing property niches.

The latest dedicated data centre fund achieved a first closing in excess of $500 million at its December debut, with a target capitalisation of $1 billion.

While distribution facilities had not been one of Keppel Capital’s traditional priorities, the group began giving the rapidly growing segment more attention in 2020. In June of last year, Keppel Capital stepped up its logistics efforts as its Alpha Investment Partners private funds division joined forces with Canada’s Manulife and Indonesian warehouse specialist MMP for a $200 million logistics joint venture in the Greater Jakarta area.

Fulfilling a Vision

The launch of the China logistics fund is in line with Keppel’s Vision 2030 plan, which the group unveiled in May last year as a way to keep its business in step with an economy shifting to sustainable, tech-enabled approaches. For its asset management division, Keppel has directed the real estate-focused units to seize opportunities in providing solutions for sustainable urbanisation.

Building on Keppel’s strengths in engineering, developing and operating specialised assets, as well as capital and asset management, under Vision 2030 the group will focus on the four key business areas of energy/environment, urban development, connectivity and asset management.

To further those aims, Keppel last November announced a leadership reshuffle in which it appointed tech-savvy MIT grad Louis Lim as CEO of development flagship Keppel Land and promoted 20-year real estate veteran Anthea Lee to head Keppel’s data centre REIT.

The change in leadership came just three months after state-owned Temasek, Keppel’s largest shareholder, abandoned a $3 billion buyout offer for the conglomerate after disappointing financial results for the first half of the year.

Keppel Capital had assets under management of S$37 billion ($27.8 billion) at the end of 2020. It raised close to $4.5 billion last year, including commitments from large global institutional investors, reflecting strong demand for real assets with cash flow that can serve as long-term inflationary hedges, Tan said.