Warburg Pincus has invested $400 million into NewEase, a recently-established logistics real estate venture focused on improving shipments through China’s airports and urban hubs, according to a company spokesperson.
The investment represents the US private equity firm’s latest bet on growing demand for faster ecommerce services on the mainland. In a statement, NewEase China declared that the partners have “jointly invested $800 million to build the mainland’s first domestic logistics infrastructure investment, development and operation firm focused on aviation hubs.”
The new company, which once again teams mainland entrepreneur Sun Dongping with the Asia real estate team from Warburg Pincus, has set the goal of establishing 10 million square meters of logistics facilities in the country within the next three years.
Creating 10M Square Metres of High-Tech Shipping Hubs
“The growth of China’s consumer demand and the rapid development of ecommerce has given birth to China’s modern logistics, and the supply of logistics facilities in China’s air hubs is particularly scarce,” NewEase China chairman Sun Dongping commented.
The company, which was freshly founded this year, says it is “committed to investing in the development of technologically-oriented, intelligent modern logistics centers with regional linkage functions such as airport hubs.”
NewEase is initially focusing on establishing its facilities at key airports such as Beijing, Shanghai, and Guangzhou. According to its website, the company already operates nine distribution centres across the country including centres in Shanghai, Wuhan and the Jiangsu province cities of Nanjing, Changzhou, Changsha, and Kunshan.
With partnerships already established with JD.com, SF Express, Kimberly-Clark, and Zhongtong Express, NewEase indicates that its business scope covers investment and development of logistics infrastructure, warehouse management, and offline logistics services.
Warburg Pincus Invests With Old Friends
“The rise of China’s new economy and the rapid integration of the country into the global economy have accelerated development of the mainland’s air freight industry. The growth in consumption, the ongoing improvement of the country’s manufacturing sector and the diversification of industrial requirements all drive demand for industrial facilities and services,” Warburg Pincus’ head of real estate for Asia, Joseph Gagnon, commented. Warburg Pincus is very optimistic about the development prospects for this industry and for NewEase China.”
The investment makes NewEase the third major industrial real estate venture founded by Sun Dongping to receive backing from Warburg Pincus, which manages more than $68 billion in assets globally. This latest deal comes seven years after Warburg Pincus, Sun and Jeffrey Shen co-founded what is now known as ESR in 2011, which has since grown into $12 billion logistics developer that has operations in Greater China, Southeast Asia, Korea and Australia.
In 2014 Sun once again worked with the US private equity firm in establishing D&J China, an industrial developer focused on building workshops and R&D facilities. In 2016, D&J bought a 40 percent stake in Cheng Hei-ming’s Kailong, and just last year Warburg Pincus led a $180 million series D investment in D&J.
Warehouses Stay Sexy With Investors
While Sun and Warburg are busy setting up new ventures, some of the world’s largest fund managers are still showing interest in their older enterprises.
In May of this year German financial giant Allianz Group opted to commit $185 million to ESR’s $1.2 billion Japan logistics fund and in June, ESR picked up more funds on its path to a planned IPO as CITIC Securities One-Belt-One-Road (“CSOBOR”) Fund, an investment vehicle managed by the state-owned investment bank’s CLSA subsidiary took an undisclosed stake in ESR.