Global Logistics Properties’ sale may say something about China


Global Logistics Properties (GLP) is having some difficulty selling itself. Last year, the Singapore-based company which is one of the largest owners of logistics property in the world, embarked upon what it called a ‘strategic review’. This appears to have been largely at the request of the Singapore Sovereign Wealth Fund, GIC, that wished to sell its 36.9% stake in GLP. Although the company is quoted on the Singapore stock exchange, it seems that the preferred solution was a direct sale of the whole company to a private buyer.

At first glance GLP appears attractive to any investor. It owns warehousing assets estimated by the company to be worth US$40bn, spread across the United States, Japan, Brazil and China. This asset base has grown at a compound annual growth rate (CAGR) of 81% since 2012, with profit growth comfortably in double figure percentages. Yet the sale of the company has run into difficulty.

At the heart of the problem is GLP’s most important market; China. It is reported by the Financial Times that Mr Ming Mei, CEO of GLP, made an agreement in 2014 with Hopu Investment Management, a company which he is also associated with, to sell a third of GLP’s assets in China to Hopu and give them certain powers over the direction of GLP’s subsidiary in China. It is unclear what these powers actually are and if the shareholders vote in 2014 approving the deal was sufficiently informed about the nature of the contract.

If it is true that Hopu Investments can interfere in the running of GLP in China, then this will affect the value of GLP. China accounts for more than half of the assets of the company by value and it also represents one of the most dynamic market opportunities.

This is deterring prospective purchasers of GLP. The private equity house Warburg Pincus is reported by the Financial Times to have made a non-binding bid for GLP dependent on clarification of the position of Hopu and Mr Ming Mei. The only other reported bidder for GLP is Hopu Investment Limited. News reports on Thursday suggest that Hopu has been successful in its bid, but these reports are unconfirmed.

Whilst the fate of a warehouse property provider of the size of GLP is important, there might also be a further issue. The fact that GLP felt it had to do such a deal in the first place may be indicative of the problems of logistics investment generally in China.

Source: Transport Intelligence, July 13, 2017

Author: Thomas Cullen