Warehouse operator GLP launches US$2 billion China logistics fund with Singapore’s GIC
GLP, Asia’s largest warehouse operator, has launched a US$2 billion China fund in partnership with Singapore sovereign wealth fund GIC as it continues to tap into the growing demand for warehousing fuelled by a boom in e-commerce and domestic consumption.
“This fund provides long-term capital to further strengthen our dominant network in China,” Ming Mei, co-founder and CEO of GLP, said on Tuesday. “We continue to see significant customer demand for our integrated logistics solutions and look forward to continuing to build out relationship with GIC.
GLP is the fund’s asset manager and will contribute seed assets to the fund, which will focus on existing income-generating facilities in China.
This is GLP’s second China focused fund in seven months. In February GLP teamed up with state-owned insurer China Life to create a fund with total equity commitments of 20 billion yuan to acquire completed logistics and industrials assets in China.
Already the largest owner of logistics facilities in China, GLP’s 30 million square metres of modern sheds focus on domestic consumption and account for roughly half of their global business. They cater to industries ranging from e-commerce, to third party logistics providers, retailers and manufacturers.
The company aims to continue expanding in China through future funds and capital recycling initiatives.
As one of the top three players in logistics and supply chain solutions, GLP has “superior access to deal pipeline, deployment and tenancies,” said Priyaranjan Kumar, regional director of Cushman and Wakefield capital markets group for the Asia Pacific region. This, he said, allowed them “more avenues to recycle capital, strengthen and diversify their existing capital sources. A continued role as an asset manager also helps build annuity fee income base.”
Headquartered in Singapore, they own more than US$50 billion in assets across real estate and private equity, spread over countries including China, Japan, Brazil and the US.
The venture marks GIC’s first commitment to GLP since selling their shares in January. GIC owned 37 per cent of the company, the largest shareholder, before GLP delisted from the Singapore Exchange in a US$11.6 billion privatisation deal: the biggest-ever private equity acquisition by value.
“We believe high consumption growth, especially of e-commerce, will continue to drive demand for high-quality logistics properties in China,” said Lee Kok Sun, chief investment officer of GIC Real Estate. “This venture will enable us, as a long-term value investors, to capitalise on the structural growth of the logistics sector in China.”
China’s 230 trillion yuan (US$35.76 trillion) logistics industry is booming, led by the distribution needs of giants like Alibaba and JD.com, who are increasing the demand for storage and delivery.
While e-commerce is a key driver behind the growth in the logistics platform, “it is by no means the only pillar,” argued Kumar. “Manufacturing, continued urbanisation and hence consumerism in tier 3-5 cities, trade are all important contributing factors.”
In August, China Logistics Property Holdings, the country’s second largest logistics player, announced plans to set up a fund to co-invest up to US$300 million over five years into warehousing projects in the country. The venture was in partnership with LaSalle Investment Management Asia, a unit of global property services firm Jones Lang LaSalle.
China’s second-biggest online shopping company, JD.com, owns 9.9 per cent of China Logistics, and uses warehouses operated by the company.