SINGAPORE/HONG KONG (BLOOMBERG) - The litany of complaints about the biggest Asian buyout deal became so bad that Singapore's sovereign wealth fund decided to act.
A bidding process for Global Logistic Properties, the US$9.6 billion warehouse developer, has been running since the start of the year. In May, representatives of GIC, the company's largest shareholder, called the GLP working team managing the sale into their offices, according to people familiar with the matter. GIC instructed the assembled group to be more responsive to bidders' questions and share information transparently in the auction, the people said, asking not to be identified because the discussions were confidential.
Potential acquirers including Warburg Pincus, Blackstone Group and RRJ Capital had been pressing for months to get increasingly detailed financial information on GLP as they compete with a rival consortium that includes the company's chief executive officer. At the heart of the issue for the bidders is whether the management-backed group, which also includes Chinese private equity firms Hillhouse Capital Management and Hopu Investment Management, has an advantage over other buyers with privileged access to information.
"Everyone has to be on a level playing field," Justin Tang, a director of global special situations at Religare Capital Markets in Singapore, said by phone on Monday (June 26). GIC "can step in as an ombudsman and ensure it's run according to generally accepted principles."
Some bidders had told GLP that documents they needed were trickling in too slowly and important details were blacked out, the people said. The information they were looking for related to the company's joint ventures, fund management performance, employment agreements and appraisals of certain assets, they said.
The May discussion was held in a closed meeting room to prevent uninvolved parties from observing the conversation, one of the people said. For GIC, calling the meeting followed multiple conversations with the parties running GLP's strategic review, including the bankers and lawyers advising a special board committee. GLP had already been taking steps to address the concerns raised by bidders, according to one person.
GLP ended up extending the deadline for final offers to June 30 to give buyers more time to vet its network of warehouses, which sit at the centre of the burgeoning logistics sector in China, Japan, Brazil and the US. Additional documents have gradually been added to the physical data rooms and online document repositories being run by GLP, according to the people. As that date approaches, GIC has become comfortable that information access for all shortlisted bidders has improved, one of the people said.
"The strategic review has always been undertaken independently in the interest of all shareholders," GLP chairman Seek Ngee Huat said in an emailed statement on Monday in response to Bloomberg queries. "The special committee is focused on ensuring that the process is fair and transparent in order to maximize value."
As a shareholder with a large stake, GIC works with all parties in this process, a spokeswoman for the sovereign fund said on Monday in an emailed response to Bloomberg queries, adding that GLP and its board are responsible for the process. As the situation is competitive, it is "not surprising to have noises and excitements around the process," according to the statement.
"GIC, GLP and its board need to exercise great care in our respective purviews," GIC said in the statement. "We will continue to monitor carefully the developments and decide our next course of actions accordingly."
GIC, which owns 37 per cent of the company, has a long history with the assets: The company traces its roots back to the sovereign fund's 2008 purchase of Asian industrial properties from Prologis Inc, a portfolio later rebranded as GLP and listed on the Singapore stock exchange in 2010. It was a request from GIC that prompted the developer to start a strategic review at the end of last year.
The strategic review is being handled by a special committee of GLP independent directors, which is receiving advice from JPMorgan Chase & Co. Representatives for Blackstone, JPMorgan, RRJ Capital, Warburg Pincus and the management consortium declined to comment.
If an agreement is reached, a takeover of GLP would become the largest-ever private equity buyout of an Asian company by enterprise value, surpassing last year's takeover of Qihoo 360 Technology Co, data compiled by Bloomberg show. Since Bloomberg News first reported takeover interest in November, the company's shares have soared about 60 per cent, valuing it at US$14 billion including debt.
Singapore's takeover code requires that information passed to one potential bidder be promptly furnished to other suitors requesting it. In management buyouts, rival bidders must be given material information that the executives have, as long as it doesn't constitute business or trade secrets. Board members who are involved in a bid must also cooperate with independent directors in the gathering of information.
The involvement of competitors in this auction makes disclosure a tricky balance. Warburg Pincus is considering a joint offer with its own logistics business E-Shang Redwood Ltd, which like GLP is run by former Prologis executives, people with knowledge of the matter said earlier.
Their main competition is GLP CEO Ming Mei, who leads a group of Chinese investors bidding for the business. E-commerce operator JD.com Inc and an arm of Ping An Insurance Group Co of China are in talks to join the consortium, along with property developer China Vanke Co, one person said.
Representatives for JD.com and Ping An declined to comment, while a representative for Vanke said the company has no information to disclose. Blackstone was also among suitors selected to proceed in the bidding, while RRJ Capital had been considering a joint offer with Temasek Holdings unit Seatown Holdings, people with knowledge of the matter said earlier.
"If there's no competitive tension, then they're not going to get the best price for the asset," Religare's Tang said. "We never thought it was going to be a slam dunk for management."