GCP Closes on $600M China Onshore Income Fund With Backing From Mainland Insurer

GLP Capital Partners has closed on an onshore China income fund backed by a mainland insurer, with the vehicle’s total size including leverage amounting to RMB 4.3 billion ($600 million).

China Income Fund X marks the latest addition to an onshore income fund series first launched by the company in 2020, the asset management arm of Asian warehouse giant GLP said Monday in a release. The fund is seeded with 13 stabilised income-generating industrial park assets with a total leasable area of more than 970,000 square metres (10.4 million square feet) across core markets including Shanghai, Kunshan, Shaoxing, Tianjin, Chongqing, Shenyang and Dalian.

GCP withheld the identity of the Chinese insurer, describing it only as a “leading domestic insurance provider” and a first-time limited partner of the fund manager.

“China’s manufacturing push to strengthen industrial and supply chain resilience has accelerated demand for industrial parks amongst advanced manufacturing firms and we foresee this to be a long-term trend as the industry continues to develop,” said Teresa Zhuge, GCP’s China president. “This successful fundraise and new LP partnership affirms investors’ demand for long-term income generating industrial assets as well as confidence in our asset management capabilities.”

Brushing Off Downgrades

According to GCP, the manufacturing and warehousing logistics parks seeding CIF X serve high-end makers of cars and parts, electronics and electrical appliances, and pharmaceuticals and medical equipment, as well as new industries such as industrial robots and semiconductors.

GCP has proved a prodigious fundraiser in 2023, chalking up RMB 15 billion in equity commitments for its China onshore strategies this year despite parent GLP losing its remaining investment-grade ratings from key credit agencies.

On 2 November, the same day that S&P downgraded both GLP and its mainland unit GLP China to junk status, the company voluntarily withdrew from the agency’s credit coverage, citing a “mismatch” between S&P’s methods and the company’s business model.

Fitch Ratings also downgraded GLP to junk territory in October, with Moody’s Investors Service having withdrawn the company’s ratings in 2021 due to insufficient information.

S&P said the company is unlikely to meet its monetisation targets this year and predicted that it could raise a total of $3.9 billion for the full-year 2023. That amount is just over half of S&P’s initial 2023 forecast for GLP of $5 billion to $7 billion in divestments.

GLP had $6.5 billion in short-term maturities at the end of June, more than double its $2.8 billion in short-term debt at the end of 2022 and a sum S&P deemed “sizable” relative to the company’s $2.5 billion cash balance.

Insurance in Tough Times

Mingtiandi reported last month that GLP had sold an office complex in Beijing to a RMB 3.6 billion China income office vehicle anchored by an Asian insurance company.

The firm declined to disclose the name of its backer for that vehicle, but said that the company is a “longstanding partner” and has previously invested in its past strategies.

Top-three mainland insurer China Life is a major shareholder in GLP and has backed a number of the company’s mainland funds, including the RMB 10 billion GLP China Value-Add Venture I in 2018.

In July, five unidentified mainland insurance companies participated in the final closing of GLP Capital Partners’ China Income Fund VII, which raised RMB 2.6 billion in equity commitments. The fund was seeded with RMB 5 billion worth of mainland logistics assets from GLP’s balance sheet.

The industrial specialist has reportedly been in due diligence to sell some of its mainland assets to state-backed China Railways Logistics, after Bloomberg reported in August that the company had put up for sale some $7 billion in Chinese warehouses.