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Vanke rally fizzles by day’s end after buyout of China’s biggest warehouse operator

Investors gave a mixed reaction to Vanke’s participation in a consortium that will buy Singaporean warehouse operator Global Logistic Properties, with its shares ending unchanged in resumed trading on Tuesday

PUBLISHED : Tuesday, 18 July, 2017, 11:23am
UPDATED : Tuesday, 18 July, 2017, 10:59pm

China Vanke shares ended unchanged on Tuesday in whipsawed trading that saw them up as much as 4 per cent in the morning session, as investors had their first chance to react to an announcement that the company had become a major shareholder of Global Logistic Properties, the biggest operator of industrial real estate in China.

Vanke’s shares reached a record HK$24.2 in resumed action during the morning session, but struggled in the afternoon, eventually giving back the gains to end the session unchanged at HK$23.20.

Its Shenzhen shares climbed 3 per cent to 25.3 yuan, lifting its market value to 280 billion yuan (US$41.48 billion).

A Chinese-backed consortium led by Vanke won a management buyout on July 14 to take over Singapore listed GLP – one of the world’s largest logistic operators for S$16 billion (US$11.6 billion), which is set to be Asia’s biggest-ever private equity acquisition by value.

Vanke, Hopu lead US$11.6 billion management buyout of GLP, winning Asia’s largest takeover

Vanke, which owns a 21.4 per cent stake, is the consortium’s largest shareholder, while the remaining members include GLP’s chief executive and Chinese investors Hillhouse Capital Group, Hopu Investment Management and Bank of China Group Investment.

Vanke said on Monday that it would invest up to S$3.4 billion in GLP, as part of the S$16 billion takeover deal by the consortium.

GLP owns and manages a portfolio of 55 million square metres of modern logistics facilities in China, Japan, US and Brazil.

The company is also one of the world’s largest real estate fund managers, with assets under management of about US$39 billion.

After the deal, Vanke will add completed attributable gross floor area of around 3.75 million square meters to the existing logistics assets, “becoming the largest logistics space owner in China,” analysts at S&P Global Ratings said on Monday.

The acquisition is “a significant step toward Vanke’s diversification strategy to become an urban services provider,” they said.

Vanke said it expected to finance the acquisition by “internal and external resources”.

The transaction is subject to approval at a shareholder meeting of GLP and the approval of the relevant regulators of Singapore.

Vanke set up a logistics subsidiary back in 2015 to focus on high-standard warehouse products in major cities as management sought to diversify its revenue sources, as well as to tap into the enormous demand for urban ancillary services. It is also a key logistics partner of Blackstone Group in China.

At the end of 2016, Vanke had18 logistic properties, establishing a presence in first and second-tier cities such as Beijing, Shanghai, Guangzhou, Hangzhou, Wuhan, and Chengdu with total gross floor area of about 1.47 million sq m.

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