GLP shareholders approve $11.5b PE-backed privatization

The deal is one of Asia’s largest-ever private equity-backed transactions based on enterprise value. It comes during a year in which a handful of large-scale privatizations – including Toshiba Memory Corporation and Belle International at $18 billion and $6.8 billion, respectively – have pushed PE investment to record levels. Hillhouse was also a participant in the Belle deal.

GLP said in a filing that the offer of S$3.38 per share won overwhelming support from shareholders, including GIC Private, which owns a 36.84% interest in the business. The transaction is structured as a scheme of arrangement so it must be sanctioned by a Singapore court. GLP is scheduled to cease trading on January 4.

The sale came about following a strategic review instigated at the request of GIC in December of last year. A consortium comprising Chinese property developer Vanke, Bank of China’s BOC Group Investment, and an investment entity – SMG Eastern – controlled by GLP co-founder and CEO Ming Mei, prevailed in a competitive process. A Warburg Pincus-led group was the under bidder.

Vanke will own 21.4% of GLP on completion of the deal, marginally more than Hopu with 21.3% and Hillhouse and SMG with 21.2% apiece. BOC Group will hold the remaining 15%. Hillhouse and Hopu are existing investors in GLP, owning 1.58% and 8.44%, respectively.

In 2014, Hopu 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.

GLP was founded in 2002 by Mei and Jeffrey Schwartz, who previously ran Prologis’ China business. In 2008, the company teamed up with GIC to acquire the Prologis China and Japan operations for $1.3 billion. GLP had 55 million square meters of warehouse facilities completed or under development worldwide as of March, including 28.7 million sqm in China, 6.2 million sqm in Japan, 16.1 million sqm in the US and 3.8 million sqm in Brazil.

The company leads in terms of completed area in all markets except the US, where it is in second place behind Prologis. GLP’s market leadership is most pronounced in China, where its 17.5 million sqm in completed assets dwarfs its nearest competitor Goodman at 2.5 million sqm.

In addition to warehouse operations, GLP’s growth strategy includes developing greenfield warehouse space and expanding its global footprint through its fund management platform. The fund had $27 billion in invested capital and $12 billion unallocated as of March. Fund structures include real estate investment trusts (REITs), income funds and development funds.

Fund management fees in the 2017 financial year came to $181 million, up from $150 million the previous year. The total comprises $126 million in asset and property management fees and $55 million in development and acquisition fees. Revenue from the entire portfolio grew from $777 million to $880 million over the same period, while net profit grew from $1.03 billion to $1.06 billion.

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• Topics
• Greater China
• Southeast Asia
• Buyouts
• Real estate
• Infrastructure
• China
• Hillhouse Capital Management
• Hopu Investment Management
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