In the last few years, China Investment Corporation (CIC) has become known as one of the biggest acquirers of real estate, but now the Chinese sovereign wealth fund may be on its way to owning the world’s biggest collection of sheds.
CIC is reportedly in discussions to acquire Global Logistic Properties and its 52 million square metres of warehouses in China, Japan and the Americas, according to a recent report by Bloomberg. If completed, the deal for the $8.6 billion warehouse developer would rank among Asia’s largest ever corporate takeovers.
GLP Denies, Bloomberg Gives Details
GLP today denied the existence of any takeover discussions in a statement to the Singapore stock exchange. In its statement, GLP declared, “The Company wishes to advise that it is not in discussions with the above referenced investor group at this time. The Company remains committed to enhancing shareholder value and continues to review and assess potential opportunities.”
The Bloomberg account, however, listed sources familiar with the deal as indicating that CIC had already been joined in its bid by mainland-based Hopu Investment Management and Hillhouse Capital Management. The trio is also said to be sounding out other potential partners to see if they would have any interest in joining the consortium. A deal would hinge on the willingness of Singapore’s GIC to sell as the sovereign wealth fund holds a 37 percent stake in GLP and is its largest shareholder.
It’s estimated that GLP has been involved in at least $17.1 billion of acquisitions since 2013. In September, the firm purchased a $1.1 billion US logistics portfolio from Hillwood Development Company.
Potential Investors All Connected To GLP
Should GLP receive an offer from the CIC-led group, the logistics giant would be familiar with the bidders having worked with all three in the past few years. Additionally, the firm closed a $7 billion fund dedicated to building more distribution centres across China in 2015 and has made a number of other deals in the country.
“GLP has been operating in China and the Chinese consortium knows the target very well, so it’s a deal working in their favor,” Andrew Sullivan, managing director at Haitong International Securities Group told Bloomberg. “The Chinese investors are expecting the renminbi to depreciate further, so they are watching very closely at any opportunity to acquire overseas assets.”
In 2011, GLP and CIC formed a joint venture to acquire 15 Japanese logistic properties from LaSalle Investment Management for $1.6 billion and said at the time that it would consider future collaborations with China’s largest sovereign wealth fund.
Hopu also has history with GLP having been part of an investment group that pumped $2.51 billion into the shed operator’s China subsidiary. The Beijing-based firm teamed with China Life Insurance and Bank of China Group Investment on that 2014 deal. Hillhouse is also familiar with GLP from its founder, venture capitalist Lei Zhang, having already acquired an 8.2 percent stake in the developer.