PE-backed e-Shang Redwood buys Singapore industrial REIT
E-Shang Redwood (ESR), a pan-Asian logistics services company backed by Warburg Pincus, has moved into Southeast Asia with an agreement to buy 80% of Cambridge Industrial Trust (CIT), a Singapore real estate investment trust (REIT) with assets worth S$1.4 billion ($980 million).
The sellers are National Australia Bank and Singapore property developer Oxley. ESR will also take 100% indirect ownership of CIT’s property manager. The deal comes within weeks of ESR receiving a $300 million pre-IPO investment from a consortium comprising GF Investments, Huarong International, Huarong Rongde, SPDB International, China Everbright, Everbright Securities and CMBC International.
CIT listed in 2006 and is Singapore’s first independent industrial REIT, according to a statement. It invests in quality income-producing industrial real estate and has a diversified portfolio of 50 properties located across Singapore, with a total gross floor area of approximately 8.4 million square feet. These properties include logistics, warehousing, light industrial, and general industrial.
“Our investment underscores our confidence in the underlying fundamentals and quality of CIT’s portfolio of assets, which provide us a strong platform for further diversification and growth into Singapore and key markets across Asia. ESR’s interest is aligned with CIT’s management and Unitholders and we look forward to seeking opportunities to add value to all its stakeholders,” Jeffrey Shen and Stuart Gibson, co-CEOs of ESR.
ESR was established in early 2016 through the merger of Singapore-based warehousing company Redwood Group Asia and Chinese counterpart e-Shang, which was founded in part by Warburg Pincus. Prior to the merger, the two companies had been invested by APG Asset Management, Dutch pension fund PGGM, Morgan Stanley, PAG and Goldman Sachs.
More recent funding includes a commitment from US-based investment firm Equity International to focus its first Asia fund on ESR projects, while Ping An Insurance Group contributed $300 million last July. The company has more than 6.5 million square meters of logistics real estate projects – worth more than $5 billion – across China, Japan and South Korea.
The need for supply chain modernization on the back of increasing online shopping activity has ramped up PE interest in the sector throughout developing Asia, with logistical gaps in China as well as Southeast Asia and India expected to drive rapid medium-term growth. Warburg Pincus has also seeded a platform start-up in India, committing $125 million to Stellar Supply Chain Solutions.
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