Big China investors take stakes in Global Logistic Properties and its China subsidiary

A GROUP of big-name China investors will invest up to US$2.5 billion in Global Logistic Properties (GLP), the warehouse operator said on Tuesday.

GLP could sell about one third of its China subsidiary in the transaction, and the new investors will also take a small stake in the parent company.

The firm said it will benefit from the "strategic land holdings, customer relationships and increased business opportunities" with the investors while the cash injection will help it "capitalise on (the) huge China opportunity".

The investors - dubbed by GLP as "strategic partners" - include a wholly-owned subsidiary of Bank of China and HOPU Funds. HOPU Funds is backed by large state-owned companies and institutional investors in China.

The investment is split into two tranches.

The first is US$1.6 billion - US$1.48 billion of new shares in GLP's wholly-owned Chinese subsidiary GLP China, and US$163 million of new shares in GLP itself. The new GLP shares are about 1.5 per cent of its units outstanding and will be sold at $2.755 each.

The second tranche of up to US$875 million will be in new shares in the China subsidiary.

It adds up to an investment of up to US$2.5 billion in GLP and its China subsidiary.

GLP employees and its management team will also be investing in the China subsidiary. Together with the China investors, they could end up with up to 34 per cent of the unit.

The investment in the China company is subject to a three-year lock up period.

GLP will use most of the proceeds to strengthen its network in China.

After the investments are completed, the GLP board intends to appoint Mr Fang Fenglei as a director. Mr Fang is founding partner and chairman of HOPU Investments, which manages one of the main investors.