Italy’s Vailog is teaming up with China’s Tiandihui (天地汇) to form a RMB 5 billion ($730 million) logistics fund and establish a warehouse development joint venture. The two plan to work together to build out a network of distribution centres across China, linked by Tiandihui’s “smart logistics” technology to profit from growing demand for logistics space.
Tiandihui, also known as 56pingtai.com, announced the tie up with Vailog on its corporate WeChat account on 18 August, and Vailog China chairman Walter Qian confirmed the co-investment to Mingtiandi via email yesterday.
In the statement, Xu Shuibo, chairman of Tiandihui, said of the deal, “This is the largest cooperation project involving European capital in China’s logistics sector, and we are confident it will bear fruitful results.”
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According to a story on Sina.com, the the two companies aim to leverage funds raised to build new warehouse facilities in China’s principal transportation centres, and also to acquire existing centres for renovation and upgrade.
In total, the joint venture between the Tiandihui, a Shanghai-based fourth-party logistics service provider already backed by mainland investment bank CICC, and Vailog, which has previously cooperated with Hong Kong private equity shop Gaw Capital, aims to establish 20-25 logistics sites in both first and second tier cities nationwide.
The Tiandihui-Weilong Modern Logistics Industry Development Fund, was inked in May, according to Tiandihui’s announcement but was formally announced this week at the company’s fifth anniversary party in Shanghai.
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Shanghai-based Tiandihui, is an O2O logistics company that aims to use big data, mobile technologies and cloud computing applications to bring new efficiencies to China’s logistics sector, and already offers its services in 50 mainland cities and connects some 21,000 members with 310,000 active drivers.
According to comments made to Sina.com by Xu, Tiandihui’s 2017 turnover was RMB 117 billion ($17 billion). By the end of the first half of 2018, turnover had already broken RMB 100 billion, and it is expected to reach RMB 200 billion for the full-year 2018. While the company has not yet turned a profit, Xu said that Tiandihui should be profitable by December of this year.
The company raised $79 million in May 2018 in a Series C funding led by China International Capital Corporation (CICC) and Mingxiao Capital, with by San Francisco-based StarVenture Capital also participating.
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Italy-based Vailog has been active in China since 2006. In 2015, it formed a venture with Gaw Capital to invest anywhere between $300 million and $1 billion in the China logistics property market utilising the $1.025 billion Gaw Capital Real Estate Fund IV. Vailong has also cooperated with GLP on the mainland.
The Italian developer has 15 logistics projects around China, including three in Shanghai, one in Zhejiang, one in Tianjin, two in Shenyang, two in Chongqing, one in Wuhan and one in Foshan, Guangdong. In the second half of 2018, the company reported that all of its completed China logistics parks were 100 percent occupied. Its clients include e-commerce companies, auto parts suppliers, Daikin, Kao and a number of local and international 3PL concerns.
In 2015, Vailog was acquired by Segro, a UK investment company founded in 1920 and listed in 1949. It manages 5.7 million square metres of space worth more than $9 billion.