Deal focus: RRJ doubles down on e-commerce logistics

Fast forward 12 months and Yupei has moved the goalposts. Its project pipeline comprises 7.8 sqm of gross floor area across 28 facilities and it wants to achieve 7 million sqm in net leasable area within three years. More capital was required and more groups were willing to provide it.

RRJ has once again led a $250 million round for Yupei but this time it is working with a wider pool of co-investors, both LPs in its funds and independent players. A source familiar with the deal tells AVCJ that the consortium RRJ has formed includes leading institutions from North America and Singapore. Yupei has in turn restructured its business into a stand-alone platform, which should make it easier to secure follow-in investments. The company is seen as a shoo-in for an IPO but there is as yet no timetable.

Yupei's growing ambitions and the willingness of investors to support the company speaks volumes for the rise of e-commerce in China, and the consequent demand for high-quality logistics infrastructure. Online shopping gross merchandise value (GMV) came to RMB2.8 trillion ($451 billion) in 2014, up 48.7% year-on-year, and accounting for over 10% of overall retail sales for the first time, according to iResearch Consulting.

Logistics costs as a percentage of GDP are 18% in China compared to 8% in the US, while logistics space per capital is one twelfth that of the US.

JD.com is the country's largest online retailer with GMV of RMB260.2 billion in 2014, and a Yupei customer. It employed nearly 48,000 warehouse and delivery personnel as of the end of last year. They work in fulfillment centers in seven cities, distribution centers in 12 cities, stand-alone warehouses in another 21 cities, and 3,210 delivery and pick-up stations nationwide. All bar two of JD.com's facilities are leased from third-party providers.

"With the rapid development of e-commerce and fast growing domestic consumer demand, we have seen the huge demand for modern and high-end warehousing facilities," says James Liu, a managing director at RRJ. "Since our investment last year, the company has demonstrated great performance in project development and growth. We are confident about its management's ability to execute and scale up."

Yupei was founded in 2000 and has developed 60 warehouses, logistics parks and e-commerce operation centers. It primarily focuses on tier-one and tier-two cities and works with the likes of Bosch, Coca-Cola, Alibaba Group and Xiaomi, as well as JD.com. The company received a $200 million commitment from The Carlyle Group and the US-based investment firm The Townsend Group in 2013.

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• Topics
• Industrials
• Expansion
• Greater China
• Real estate
• Infrastructure
• Logistics
• RRJ Capital
• TMT
• China
• Growth capital
• Real estate
• Infrastructure