A Chinese investment consortium is wagering $2.51 billion that there is money to be made from China’s need for warehouses, and that Singapore’s Global Logistics Properties (GLP) is well-situated to realise these profits.
The share purchase by the Chinese group brings it into the same market that in recent months has already attracted global investment heavyweights such as Goldman Sachs, Sam Zell and the Carlyle Group.
A Bank, A Fund and a Mystery Investor
According to a story in the Wall Street Journal today, Bank of China Group Investment and private-equity firm Hopu Funds, together with an unamed additional investor will put down $2.35 billion to take a 34 percent stake in GLP China, and invest another $163 million in the Singapore-listed parent company.
The report indicated that the anonymous investor had been identified as China’s largest insurance company. On its corporate website, China Life Insurance (Group) Company says that it, together with its subsidiaries “constitute the largest commercial insurance group in Mainland China.”
GLP, which focuses on warehouse development in China and Japan, was formed as a spin-off from Prologis in 2008 and is 37 percent owned by Singapore’s sovereign-wealth fund GIC Pte. Ltd.
Group Joins Goldman, Sam Zell and Carlyle Group in Warehouse Sector
The rapid expansion of China’s retail sector, particularly the boom in ecommerce has fueled demand for international grade logistics properties, and warehouse development has drawn significant investor interest in recent months.
During December, Goldman Sachs agreed to provide a US$120 million pre-IPO loan to Shanghai-based start-up warehouse developer e-Shang, and in August last year, Equity International, a private equity firm run by US investor Sam Zell announced a strategic partnership with Asia-focused logistics real estate fund, The Redwood Group for expansion of Redwood’s logistics property platform in the region.
Also in August of 2013, US private equity giant Carlyle Group announced a US$400 million joint investment with the Townsend Group and China warehouse developer Yupei to acquire warehouses already developed by Yupei and to develop more distribution facilities to supply China’s booming logistics sector.