Global Logistic Properties confirms buyout bids
Global Logistic Properties (GLP), a Singapore-listed warehouse operator with a $40 billion portfolio – over half of which is based in China – has confirmed the receipt of multiple buyout offers.
The company said in a filing that various non-binding proposals have been submitted as part of a strategic review initiated at the end of last year following a request from GIC Private, which holds a 36.6% stake in the business. GLP's CEO, Ming Mei, has an interest in one of the bids.
The company’s stock has gained more than 30% since the strategic review was announced. As of mid-morning trading on February 6, it was up 4.2% at S$2.73, giving GLP a market capitalization of approximately S$12.8 billion ($9 billion).
Several private equity firms have been linked to GLP. Debtwire reported that Warburg Pincus, The Blackstone Group, Alibaba Group-backed electronics retailer Suning Holdings, and a consortium comprising Hillhouse Capital and Hopu Investment were among those lining up bids. Prospective buyers are seeking debt packages worth $6-8 billion.
Hillhouse was GLP’s second-largest shareholder after GIC with an 8.14% stake as of June 2016. Fang Fenglei, founding partner and chairman of Hopu, sits on the GLP board. Both Fang and Mei have recused themselves from board discussions of the bids.
Hopu is part of a consortium that holds a 1.5% interest in the company. In 2014, the private equity firm brought several LPs from its second fund into GLP alongside a Bank of China investment unit and China Life Insurance. They committed $1.6 billion. A second tranche took the total to $2.5 billion as Boyu Capital and several Chinese strategic investors came on board. In addition to an equity stake in GLP, the consortium owns about 30% of the company’s China subsidiary.
According to a January presentation, GLP has 53 million square meters of facilities completed or under development, with 27.4 million sqm across 38 cities in China, 5.6 million sqm in Japan, 16 million sqm in the US and 3.6 million sqm in Brazil. It claims to be the market leader in China, Japan and Brazil, while placing second in the US after Prologis.
In China alone, GLP’s 15.8 million sqm of completed facilities compares to two million sqm for Goodman and 1.9 million sqm for e-Shang Redwood, which are ranked second and third, respectively. China-focused e-Shang was founded by Warburg Pincus, went on to receive capital from various investors including APG Asset Management and PGGM, and then merged with Redwood in 2016 to create a pan-Asian platform. In January, it raised a $300 million pre-IPO round from a group of Chinese investors.
Spurred by a lack of high-quality supply and rising demand from retail customers, private capital is flooding into China's logistics sector. Warehousing providers and third-party logistics players are popular targets.
GLP noted in its 2016 annual report that China’s warehousing stock per capita is one thirteenth that of the US. The company expects China to have 650 million sqm of logistics facilities, but only 132 million sqm will be considered modern facilities. Organized retail, including e-commerce and chain stores, accounts for 33% of GLP’s total leased area nationwide. The express delivery and transportation share stands at 24%, up from just 1% in 2011.
Its largest customers are Best Logistics and online retailer JD.com. The former, which is part-owned by Alibaba, completed a $760 million round of funding last September led by Everbright Financial Holding Asset Management and CITIC Private Equity.
In addition to PE funds, sovereign wealth funds and pension funds, capital is entering the sector through joint ventures and fund management structures created by the likes of GLP, Goodman and Prologis. Goodman has a longstanding relationship in China with Canada Pension Plan Investment Board (CPPIB), while Prologis is working with Abu Dhabi Investment Authority (ADIA).
GLP describes itself as a fund manager, developer and owner-operator of modern logistics facilities, with $26 billion invested and $13 billion in uncalled capital. Fund structures – in which GLP’s stakes range from below 10% to more than 50% - include real estate investment trusts (REITs), income funds and development funds. The second China development fund launched in 2015 and has $7 billion under management, of which $3.7 billion is an equity commitment from GLP.
Fund management fees came to $150 million in the 2016 financial year, comprising asset and property management fees of $98 million and development fees of $52 million. Pre-tax development profit was $255 million. Revenue from the entire portfolio came to $777.5 million in 2016, up from $708 million in 2015, while net profit rose from $667.9 million to $1.03 billion.
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