Korea's SK invests $334m in PE-backed e-Shang Redwood

SK Holdings, the parent company of SK Group, said in a filing that it would take an 11.77% interest in ESR. The investment follows a $300 million commitment to the company in January – described as a pre-IPO round – from a seven-strong Chinese consortium that included China Everbright and GF Investments.

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 by two Chinese entrepreneurs and Warburg Pincus. Prior to the merger, the two companies had been invested by APG Asset Management, PGGM, Canada Pension Plan Investment Board, Morgan Stanley, PAG and Goldman Sachs.

More recently, ESR received $300 million from Ping An Insurance Group and $100 million from Azerbaijan’s state oil fund for a Japan-focused vehicle. The company also moved into Southeast Asia with an agreement to buy Cambridge Industrial Trust (CIT), a Singapore real estate investment trust (REIT) with assets worth S$1.4 billion ($980 million).

As of March, ESR had more than 8 million square meters of logistics space, with a further 4 million sqm under development. The aggregate open market value of its managed assets was in excess of $7.8 billion, while the company’s wholly-owned portfolio was worth $1 billion. ESR has 132 properties in Asia, serving about 260 customers, including H&M, JD.com, Carrefour, and Cainiao Network Technology, a logistics platform launched by Alibaba Group.

Like other logistics platforms in the region – such as Global Logistic Properties, which recently accepted a $11.5 billion buyout offer from a PE-backed consortium – ESR has a growing funds business. It managed 19 third-party pooled investment vehicles, including CIT, with an aggregate value of $7.8 billion when fully leveraged. As of March, $2 billion of equity had been invested, with a further $1.3 billion in uncalled capital.

ESR generated RMB649.6 million ($93.6 million) in revenue last year, up from RMB336.2 million in 2015. Over the same period, net profit rose from RMB58.9 million to RMB705.2 million.

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.

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• Topics
• Greater China
• Southeast Asia
• North Asia
• Expansion
• Infrastructure
• South Korea
• China
• Southeast Asia
• Japan
• Logistics
• Warburg Pincus Asia