Global Logistic Properties (GLP), which provides warehouses and the like in China, Japan, Brazil and the United States, has launched what it says is the largest China-focused logistics infrastructure fund.
CLF Fund II already has US$3.7 billion (S$5 billion) in equity committed to it by GLP and its investors, with debt options allowing for an investment capacity of US$7 billion to develop 13 million sq m over four years. The fund has attracted seven global institutions, including some of the world's largest national pension and sovereign wealth funds, Singapore-listed GLP said.
GLP China is the manager and holds 56 per cent of the fund.
CLF Fund II is more than double the size of the US$3 billion CLF I, which it launched in November 2013 with six partners and has reached its investment capacity.
Of the seven investors in CLF Fund II, five are from Asia, one from North America and one from the Middle East, GLP said. Four are partners in CLF I and two are new to GLP's fund management platform.
GLOBAL LOGISTIC PROPERTIES
CLF Fund II's investment capacity for development over four years
What China accounts for in GLP's total net asset value
What GLP's fund management platform expands to, with CLF II
Singapore sovereign wealth fund GIC, a major GLP shareholder, declined to comment on the deal.
CLSA senior research analyst Wong Yew Kiang is upbeat over the fund's prospects. "(The larger size and new partners) indicate there is significant interest and demand for modern logistics in China as an asset class from capital partners. Setting up more funds also ramps up their assets under management, which should drive higher return on equity over time," he said.
Potential fees earned on partners' capital will enhance returns by an estimated four or five percentage points, GLP said.
The move is positive for the company because even as GLP stands to gain higher returns by tapping third-party capital, it will retain operational control as the main fund manager, added Mr Derek Tan, DBS Group research analyst.
With CLF II, GLP's fund management platform expands 36 per cent to US$27.1 billion.
"GLP is growing very rapidly on this front - from almost negligible four years ago (to the current amount). Other developers have needed much more time to grow to this kind of scale," Mr Wong noted.
China is also GLP's primary market for development. Its development starts in China are growing at 30 per cent per annum and were worth US$1.64 billion in the 2015 financial year, GLP said.
China accounts for 56 per cent of its total net asset value. Its portfolio there has grown at a 61 per cent compounded annual rate over the past decade to 11.8 million sq m of completed facilities. GLP has a further development pipeline there of 10 million sq m, with 12.1 million sq m of land reserves.
Both CLF I and CLF II seek to capture significant opportunities arising from the shortage of modern logistics infrastructure in China. Demand is driven by growing domestic consumption, urbanisation and the growth in e-commerce, GLP said.
"The outlook for the logistics industry in China is very robust, but competition has been increasing... The fund management route will help GLP retain market share and scale up much faster," noted DBS' Mr Tan.
GLP chief executive officer Ming Z. Mei said the fund management platform is an important source of capital for the company.
Shares in GLP, which unveiled the fund yesterday morning, closed three cents higher at $2.58.