GLP said to choose Chinese group for US$10b buyout, halts trading

A property in the eastern city of Urayasu that belongs to Global Logistic Properties.
A property in the eastern city of Urayasu that belongs to Global Logistic Properties. PHOTO: GLOBAL LOGISTIC PROPERTIES

SINGAPORE/HONG KONG (BLOOMBERG) - Global Logistic Properties (GLP), the Singapore warehouse operator pursuing a sale, has picked a Chinese bidder consortium for final talks on a deal valuing the company at about US$10 billion (S$14 billion), people with knowledge of the matter said.

The investor group, fronted by GLP chief executive officer Ming Mei, edged out a rival consortium led by Warburg Pincus, according to the people.

The Chinese consortium, which includes private equity firms Hillhouse Capital Management and Hopu Investment Management, is planning to offer around S$3 per share for GLP and will now negotiate definitive terms for the transaction, the people said, asking not to be identified because the information is private.

Trading in GLP was halted on Thursday (July 13), pending an announcement. The shares closed on Wednesday at S$2.70.

Under the deal being contemplated, GLP would be taken private through a scheme of arrangement, the people said. The Chinese investor group will seek to obtain an undertaking from Singapore sovereign fund GIC, which owns about 37 per cent of the company, to vote in favour of the offer, the people said.

The 3.875 per cent notes of GLP due 2025 climbed 1.2 cents on the dollar to 97.1 cents as of 12:30pm local time Thursday, according to Bloomberg-compiled prices, the biggest jump in four weeks.

GLP is nearing the end of a months-long sale process that's faced bidder complaints that the management group has an advantage with privileged access to information. If an agreement is reached, the purchase 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.

"The market views the possible winner more favorably than the rivals, in the sense that there is continuity, familiarity and less disruption to the business," Ezien Hoo, a credit analyst at Oversea-Chinese Banking Corp in Singapore, said on Thursday. "Whether the new owner will load GLP with more debt remains to be seen."

Shares of GLP have surged 43 per cent over the past year, giving it a market value of about S$12.7 billion. It was the best performer during the period on Singapore's benchmark Straits Times Index, which gained 11 per cent.

China Vanke, one of the country's largest residential developers, is a member of the management-backed consortium, according to the people. Ping An Insurance Group of China, which previously held talks about partnering with the Chinese investors, didn't end up joining the deal, the people said.

Representatives for the Chinese consortium and GLP declined to comment, while Ping An and Warburg Pincus didn't immediately reply to e-mailed queries. A representative for Vanke said the company has no information to disclose.

The Chinese investor group had made a binding offer for GLP by the June 30 deadline, while Warburg Pincus submitted an offer that was conditional on getting access to further detailed information about the business, people with knowledge of the matter said last month. Blackstone Group didn't make a standalone bid, though it will consider buying assets from the winner, the people said at the time.

E-commerce companies such as Alibaba Group Holding and JD.com are driving a boom in demand for warehouse space in Asia. GLP said in December that it hired JPMorgan Chase & Co to advise on a strategic review requested by GIC, its largest shareholder.

"Warehouses in Asia is a fast-growing sector that attracts a lot of interest," Greg Hyland, head of capital markets at Jones Lang LaSalle in Singapore, said on Thursday. "There's a substantial undersupply of modern logistics in China, so we're seeing a lot of growth there."