Hopu participates in $2.5b China warehouse investment
Hopu Investment Management is part of a consortium that has agreed to invest $2.5 billion in Global Logistic Properties (GLP), a Singapore-listed warehouse operator with interests in China, Japan and Brazil.
Other consortium members include Bank of China's investment unit, an unnamed Chinese insurance company and other state-owned companies and institutional investors, according to a GLP statement.
They will subscribe, via a special purpose vehicle, to around 74.3 million new shares in GLP at S$2.75 apiece for a total consideration of S$204.7 million ($162.3 million). They will also subscribe to 2.1 billion new shares in GLP's China subsidiary, Iowa China Offshore Holdings, paying around $2.35 billion. The consortium will own 1.5% of GLP and 30.3% of the China subsidiary.
All of GLP's operations in China will be transferred to the China subsidiary. As of January, these included 500 completed properties in 34 cities representing 8.8 square meters of gross floor area and a further development pipeline of 8.4 million sq m. There is also a land reserve pipeline of 12.2 million sq m.
Hopu is participating via an entity called Hopu Logistics Investment Management. Fang Fenglei, the private equity firm's chairman, will join the GLP board.
Fang set up Hopu in 2007 with Richard Ong, now of RRJ Management, and they raised a debut fund of $2.5 billion. The firm made a string of high-profile investments but disbanded in late 2010 amid reports that the two principals could not get along.
Fang was said to be seeking at least $2 billion for a new vehicle, Hopu Master Fund II, with $1 billion committed as of May 2013. GLP describes Hopu as being backed by China's largest state-owned enterprises and institutional investors. Last November, Hopu participated in a HK$1.6 billion ($213 million) investment in Chinese dairy firm Yashili International.
GLP, which counts GIC Private as its single largest investor, has a $16.9 billion property portfolio comprising 23.4 million sq m. It expects to see robust demand for logistics space in China driven by rising domestic consumption, urbanization and e-commerce.
The company estimates that logistics space per capita in China is one 12th that of the US, with a total market supply of 550 million sq m, of which only about 20% is considered modern. Existing warehouse stock is mostly too small or obsolete and logistics cost as a percentage of GDP is more than double that of the US.
GLP estimates that by 2029, China's logistics space will cover 2.4 billion sq m, by which point logistics space per capita will be one third that of the US. The overall market will be worth $2.5 trillion.
In November 2013, GLP announced the $3 billion China Logistics Fund, which as of this month was already 86% allocated.
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