JD.com set to assume control of China Logistics Property

RRJ Capital is among the investors that have pledged to sell their shares to JD.com. Previous private equity backers of CNLP – a subsidiary of Chinese logistics player Shanghai Yupei Group, which went public in 2016 – include The Carlyle Group and Temasek Holdings.

The first stage of the transaction will see Shifang Li, founder and chairman of CNLP, sell 916.5 million shares to JD.com for HK$4.35 apiece, receiving HK$3.98 billion ($512 million) in cash. His interest is held through Yupei International. Consequently, JD.com’s stake in CNLP will rise from 10.64% to 37.02%, prompting an offer to buy all listed shares at the same price.

In addition, it must take out convertible bonds with an outstanding principal amount of HK$1.84 billion. Assuming full conversion, this will take the overall cash consideration to approximately HK$16.4 billion, according to a filing.

CNLP’s stock was trading at HK$4.05 when trading was halted on September 1 ahead of the announcement. As of early trading on September 7, it was at HK$4.17.

RRJ has agreed to sell its 21.94% equity interest in CNLP as well as HK$589 million in convertible bonds. The private equity firm stands to receive HK$3.9 billion in total. RRJ and Temasek together subscribed to $500 million in convertible notes issued by CNLP across two tranches of equal size in 2014 and 2015, respectively.

CNLP claims to be a leading provider of logistics facilities in China with a network of 176 logistics facilities in 37 logistics parks across 19 provinces and municipalities at the end of 2020. It had 5 million square meters of gross floor area, of which 3.6 million sqm was completed.

Revenue for 2020 came to RMB798.6 million ($123.7 million), up from RMB712.5 million the previous year. Over the same period, operating profit fell from RMB1 billion to RMB798.1 million, while net profit slumped from RMB349.2 million to RMB66.6 million. The sharp decrease in the latter figure was largely due to fair value losses on convertible bonds.

JD.com, China’s largest e-commerce retailer, is making the investment through JD Property, its infrastructure property asset management business. The unit received $700 million in Series A funding from Warburg Pincus and Hillhouse Capital earlier this year. It owns, develops, and manages warehousing and other logistics facilities, supporting the operations of Hong Kong-listed JD Logistics.

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• Topics
• Greater China
• Trade sale
• Infrastructure
• China
• Logistics
• JD.com
• RRJ Capital