Oxstones Investment Club™by The Rightsite Team,
Global Logistic Properties Limited (“GLP”), the leading provider of modern logistics facilities in China, Japan and Brazil, has launched the world’s largest China-focused logistics infrastructure fund. CLF Fund I (“the Fund”) will invest over US$3 billion to develop modern logistics facilities, capturing the significant opportunities arising from growing domestic consumption and the shortage of modern logistics facilities in China.
Six leading global institutions are investing alongside GLP. GLP is the asset manager and will retain a 56% stake in the Fund, ensuring alignment of interests with its partners. The Fund will be GLP’s exclusive vehicle for new, wholly-owned logistics development projects in China[1] during the three year investment period and provides additional capital to support sustainable long-term growth while enhancing returns on GLP’s invested capital.
This transaction establishes a strong platform for future growth and is consistent with GLP’s strategy to focus on the world’s best markets and grow its fund management business. US$1.5 billion of equity has been committed to the Fund, with leverage allowing for an investment capacity of over US$3 billion[2] over three years.
Jeffrey H. Schwartz, Co-Founder and Chairman of the Executive Committee of GLP said, “We are very excited to partner with these six leading institutional investors to launch the world’s largest China-focused logistics infrastructure fund. Investor interest was very strong, with the offering significantly oversubscribed. This is a testament to the strength of our team on the ground and the organization we have built. As demand for modern logistics facilities in China continues to grow, CLF Fund I ensures we will have increased funding in place to capture a significant share in a US$2 trillion market opportunity.”
Focused on China; Attractive Market Dynamics
China is GLP’s key growth market, where there is high domestic consumption growth, as reflected by the 18% annual growth of the country’s retail sales over the past six years. The Chinese government has identified logistics as one of the pillar industries to support economic growth. 80% of GLP’s China portfolio is geared towards domestic consumption, making it well-positioned to benefit from the country’s ongoing transition to a consumption-led economy. E-commerce is also a key driver of demand, with its share of GLP’s total leased area in China increasing from 4% in FY2010 to 22% today.
Ming Z. Mei, Co-Founder and Chief Executive Officer of GLP said, “We continue to see robust demand for quality logistics facilities from our customers, driven by sustained domestic consumption and a shortage of supply. GLP will focus on maintaining our leadership position in China, while leveraging our deep industry experience and strong customer relationships to generate attractive returns for our shareholders.”
Strong Development Pipeline for Further Growth
GLP has a strong track record of developing in China. Its portfolio has grown at a 68% compound annual growth rate over the past nine years, and today encompasses 8.2 million square meters (“sqm”) (88 million square feet (“sq ft”)) of completed facilities. This transaction will build upon the company’s market-leading position, with on-the-ground execution by one of the best teams in the industry.
GLP will seed the Fund with land to support 1.8 million sqm (19 million sq ft) of leasable area. Future developments will benefit from GLP’s strong land reserve. GLP has secured, on behalf of the Fund, a US$1 billion credit facility with China Merchants Bank to fund development activity in China.
Expanding GLP’s Fund Management Platform with Leading Global Investors
Interest from institutional investors was strong, with the offering significantly oversubscribed. The Fund comprises six leading institutions from Asia, Europe and North America, including sovereign wealth funds, pension plans and a global multi-manager. Four of these investors are new to GLP’s fund management platform, of which three are national pension and sovereign wealth funds. With the addition of CLF Fund I, GLP’s fund management platform increases to US$11.4 billion of assets under management.
M3 Capital Partners (HK) Limited served as exclusive financial advisor to GLP in connection with the formation of the Fund.
Source:GLP
Tags: building chinese logistics facilties, China, China infrastructure, china's retail sales growth, chinese domestic consumption, chinese e-commerce, chinese online retail spending, CLF Fund I, emerging market consumer spending trends, Global Logistic Properties Limited, GLP, lack of quality chinese logistic facilties, M3 Capital Partners (HK) Limited, the world’s largest China-focused logistics infrastructure fund