SINGAPORE (BLOOMBERG) - Warburg Pincus, one of several bidders pursuing Global Logistic Properties, is weighing a merger of the warehouse owner with its own logistics business E-Shang Redwood before a planned initial public offering, people with knowledge of the matter said.
The United States buyout firm is bidding together with ESR, which is providing equity in the consortium, according to the sources, who asked not to be identified because the talks are private.
If Warburg Pincus succeeds in acquiring GLP, which has a market value of US$9.2 billion (S$12.8 billion), it will consider combining the two companies ahead of any listing in mainland China or Hong Kong, the sources said.
Warburg Pincus, which is positioning itself as a strategic bidder for GLP, has other partners joining its bidding group, according to the sources. They said a GLP merger would help ESR bulk up before a share sale by boosting its presence in other parts of China, particularly second-tier cities.
Final offers are expected around the end of May after suitors have studied detailed information on GLP's business.
Warburg Pincus is counting on ESR's operational expertise to help run GLP in the future as it goes head-to-head in the bidding with a rival consortium that includes GLP chief executive officer Ming Mei.
ESR is targeting as much as US$3 billion in development starts in 2017, according to the sources. GLP was planning to break ground on about US$2.1 billion of new projects in the current fiscal year ended March, according to an investor presentation earlier this month.
Mr Jeffrey Shen, one of ESR's co-chief executive officers, is a former senior vice-president at GLP, according to its website. Fellow ESR co-founders Stuart Gibson and Charles de Portes were previously executives at Prologis Inc., which sold Asian industrial properties to Singapore sovereign fund GIC in a 2008 deal that led to GLP's creation.
There is no certainty an IPO of the logistics assets of Warburg Pincus will take place, said the souces. Representatives for ESR and Warburg Pincus declined to comment.
GLP shortlisted at least three groups in a deal that may become Asia's biggest buyout, people with knowledge of the matter said last month. A management-backed consortium that includes Chinese investment firms Hillhouse Capital Management and Hopu Investment Management has been invited to prepare a final bid, as have Blackstone Group and the Warburg Pincus-led investor group, the sources said at the time.