Transport and logistics

Warehouse operator GLP receives ‘firm proposals’ from two shortlisted suitors

A Chinese consortium and private equity house Warburg Pincus have submitted proposals for final evaluation, Reuters reports

PUBLISHED : Monday, 03 July, 2017, 10:36am
UPDATED : Monday, 03 July, 2017, 9:58pm

Singapore-listed warehouse operator Global Logistic Properties (GLP) said on Monday it had received “firm proposals” from shortlisted buyers, without providing further details.

Reuters quoted unnamed sources as saying two final bidders are in the running to take control, one a Chinese consortium backed by the company’s management, the other a group led by Warburg Pincus.

GLP declined to comment.

“The special committee is now conducting an in-depth and independent review of all terms of the proposals in consultation with the company’s external advisers,” GLP said in a statement.

“The company wishes to reiterate that there remains no certainty that any definitive transaction will materialise from, or that any offer will be made as a result of, any proposals received or the strategic review.”

A bidding process to purchase GLP, which is listed on the Singapore stock exchange with a US$10 billion market value, has been under way since the start of the year.

Some potential bidders complained that they had problems getting the required information during the due diligence process, whereas the Chinese consortium led by GLP’s current CEO, Ming Mei, was more “privileged” in that regard.

The consortium from China is made up of six parties. They include GLP’s CEO Ming Mei, director Fang Feilei’s Hopu Investment Management, private equity firm Hillhouse Capital Management, the mainland’s second largest life insurer Ping An Insurance, and property developer China Vanke, according to people familiar with the matter.

Chinese technology giant Alibaba’s founder Jack Ma and its e-commerce rival JD were among potential members that could join the consortium, according to the same sources.

The other bidder in the final run-off is American private equity house Warburg Pincus, which proposes merging GLP with its existing logistics business.

On June 23 the Financial Times, quoting unnamed sources, said private equity groups Blackstone, KKR, RRJ and TPG were among suitors to have looked at the GLP auction but decided against making a comprehensive offer, because they thought the process was “not fair”.

In a clarification issued to the Singapore stock exchange on the same day, GLP said the strategic review of bids was being overseen by a special committee comprising four independent directors of the company. GLP said it had undertaken measures to alleviate potential conflicts of interest and ensure the fairness of the process.

The China market has been the biggest revenue contributor for GLP, as it owns 17.5 million square meters of completed warehouse area. By June this year, as much as 57 per cent of the firm’s net asset value came from the Chinese market, while 26 per cent was from Japan, 9 per cent from the US and 8 per cent from Brazil.

According to public information, GLP owns and manages logistics facilities. Operations are the foundation of its business model, though it has also expanded into warehouse development and fund management.

Yvonne Zhou, partner and managing director of Boston Consulting Group, said: “Modern logistics has a high requirement for professional operational capability, which most Chinese companies lack. Large international logistics firm like GLP have advantages in cost control, client base, network, personnel training and so on.

“These capabilities cannot be built overnight, and the best way for Chinese firms to acquire it is through buyout.”