Azerbaijan fund commits $100m to e-Shang Redwood's Japan vehicle

The vehicle has a target size of $1 billion and is looking to deliver a 15% IRR over 5-7 years through investments in institutional quality logistics centers in Tokyo, Osaka and Nagoya, all of which are seen as having insufficient warehousing space. SOFAZ said in a filing that the commitment is consistent with its strategy to build a diversified real estate investment portfolio.

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.

Subsequent to the merger, the company has received capital from US-based Redwood and then a pre-IPO investment from a Chinese consortium comprising GF Investments, Huarong International, Huarong Rongde, SPDB International, China Everbright, Everbright Securities and CMBC International. ESR also raised $300 million from Ping An Insurance specifically for development of its Japan pipeline.

As of 2016, modern logistics centers comprised 6% of the overall logistics facilities in Japan, with vacancy rate of only 6.8%. Over the last five years, e-commerce companies have generated strong demand for modern logistics services and this is expected to continue.

ESR claims more than 6.5 million square meters of logistics real estate projects across China, Japan and South Korea, with offices in Hong Kong and Singapore. Last month, the company agreed to buy 80% of Cambridge Industrial Trust, a Singapore real estate investment trust (REIT) with assets worth S$1.4 billion ($980 million).

SOFAZ, which was established in 1999, had $33.6 billion in assets as of year-end 2015. Of this, 4.6% was in real estate, with 82.1% in fixed income, 10.2% in equities and 3.1% in gold. Private equity exposure comes through project investments and commitments to funds operated by IFC Asset Management, which comprises third-party capital managed by the International Finance Corporation (IFC).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• Infrastructure
• Fundraising
• LPs
• Japan
• Logistics