Warburg Pincus, one of several bidders pursuing Global Logistic Properties (GLP), is weighing a merger of the warehouse owner with its own logistics business E-Shang Redwood (ESR) before a planned initial public offering, sources say.
The United States buyout firm is bidding with ESR, which is providing equity in the consortium, said the sources, asking not to be identified as the talks are private.
If Warburg Pincus buys GLP, with a market value of US$9.2 billion (S$12.8 billion), it will look at combining the two firms ahead of any mainland China or Hong Kong listing, the sources said.
Warburg Pincus, which is positioning itself as a strategic bidder for GLP, has other partners joining its bidding group, the sources said. A GLP merger would help ESR to bulk up before a share sale by boosting its presence in other parts of China, the sources said.
Final offers are expected around the end of May, after suitors have studied detailed information on GLP's business, the sources said.
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 aiming for up to US$3 billion in development starts this year, the sources said. GLP was planning to break ground on about US$2.1 billion of new projects in the fiscal year ended March, according to an investor presentation earlier this month.
ESR co-chief executive Jeffrey Shen was previously a GLP senior vice-president, said its website. Fellow ESR co-founders Stuart Gibson and Charles de Portes were executives at Prologis, which sold Asian industrial properties to GIC in a 2008 deal that led to GLP's creation.
An IPO of Warburg Pincus' logistics assets is not certain, said the sources. ESR and Warburg representatives declined comment.
GLP has shortlisted at least three groups in a deal that may become Asia's biggest buyout, people familiar with 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 people said at the time.