Warburg Pincus commits $400m to China logistics business
Warburg Pincus has committed half of an $800 million round for Shanghai-based warehousing and logistics company NewEase China, which focuses on improving shipments through domestic airports and urban hubs.
The platform was founded earlier this year by Chinese entrepreneur Dongping Sun, who previously partnered with the private equity firm to launch warehouse developer e-Shang – now known as e-Shang Redwood Group (ESR) – in 2011 and business park developer D&J China in 2014. The remaining $400 million investment will come from NewEase itself.
The company provides technology-enabled logistics services to some of China’s largest e-commerce operators. It currently operates nine distribution centers and plans to achieve a capacity of 10 million square meters of facilities nationwide within the next three years. Customers include the likes of SF Express and Li & Fung.
China’s logistics sector is expected to be worth RMB280 billion ($41 billion) by 2018, with the buildout of e-commerce infrastructure set to be a major growth driver. The government’s Made in China 2025 policy, which is intended to move the country up the manufacturing value chain with a focus on high-end technology such as robotics, aerospace, and new materials, is also influential. To meet this goal, industrial infrastructure must be upgraded.
“The supply of logistics facilities around China’s air transportation hubs is limited. We will adopt a business model that combines heavy and light assets in the hope that NewEase China can become the leading investor and operator of logistics infrastructure,” Sun said in a statement.
ESR is already benefiting from the sector’s growth momentum. Following a combination of organic expansion and acquisitions, it now has 10 million square meters of projects in operation and under development across China, Japan, South Korea, Singapore, and Australia. The company has also received multiple rounds of funding, most recently a commitment from CITIC Securities, which is expected to pave the way for an IPO next year.
Meanwhile, D&J China, which counts Johnson & Johnson and Shell as clients, has more than 2 million sqm of projects in operation or under development. The company has completed four rounds of funding, most recently a $180 million Series D in September 2017 that was led by Warburg Pincus.
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