Singapore sovereign wealth fund GIC Pte Ltd and Global Logistic Properties Limited (GLP) are setting up a US$2 billion fund to invest in China logistics assets, a sector that’s seeing vibrant growth with the rise of e-commerce.
The fund will be overseen by Singapore-based GLP’s subsidiary, GLP China, which will contribute the seed assets, the companies say in a joint statement on September 11.
“We believe high consumption growth, especially of e-commerce, will continue to drive demand for high-quality logistics properties in China. This venture will enable us, as a long-term value investor, to capitalise on the structural growth of the logistics sector in China,” Lee Kok Sun, chief investment officer of GIC Real Estate, says in the statement.
Ming Mei, co-founder and chief executive officer of GLP, adds that the fund will “provide long-term capital to further strengthen our dominant network in China”, and is in line with his company’s fund management strategy.
“We continue to see significant customer demand for our integrated logistics solutions and look forward to continuing to build our relationship with GIC,” he says.
GIC is the single largest shareholder in GLP, with a 37% stake in the company, which provides logistics facilities in several countries, including Brazil, China, Japan and the US.
This isn’t the first time they are partnering for an overseas deal. In 2014, they jointly acquired IndCor Properties, one of the largest industrial platforms in the US, from private equity manager Blackstone for $8.1 billion.
GLP was taken private last year by a Chinese consortium led by Hillhouse Capital for $11.6 billion, a deal that was backed by GIC.
Despite the intensifying trade war between China and the US, China’s logistics industry still looks appealing to investors because of the country’s vibrant e-commerce activities.
German data provider Statista forecasts China’s e-commerce industry to grow 12.4% per annum in total revenues over the next four years.
GLP currently has over $50 billion of assets under management across its real estate and private equity segment while GIC has total assets of more than $100 billion.