September 2020
AAM Magazine
September 2020
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Hong Kong’s ESR forms US$1 billion joint venture to invest in Korea logistics assets

South Korea Logistics industry cartoon drawing

Hong Kong logistics property investment firm ESR Cayman has completed its previously announced US$1 billion three-way joint venture that will focus on investing in South Korea’s industrial and logistics sectors.

Its partners are the Canada Pension Plan Investment Board (CPPIB) and Dutch pension manager APG Asset Management.

ESR’s initial investment in the joint venture company, ESR-KS II, is $200 million and CPPIB and APG are investing $450 million and $350 million, respectively, ESR says in a statement on June 18.

The deal was first announced in April, and the company repeated its assessment from two months ago that the total investment could be doubled to $2 billion “over time”.

The joint venture will be seeded with land in Incheon, South Korea’s third largest city. The land will be developed into a logistics and distribution centre with 154,422 square metres of gross floor area.

“E-commerce breakthroughs and a shortage of modern warehousing space are fuelling the continued growth of the logistics sector in the country. The strategic location in a market with constrained supply makes the initial Incheon City seed asset a prime opportunity,” Thomas Nam, chief executive officer of ESR-Kendall Square, a South Korean unit of ESR, says in the statement.

ESR had $22.1 billion of assets under management as of December 2019.

CPPIB, which manages investments of the Canada Pension Plan, had C$409 billion ($300.69 billion) of total assets as of March 2020.

APG Asset Management had around 533 billion euros ($577 billion) of total assets as of February 2020.