Chinese buyout group wins $11.6bn deal to buy Global Logistic Properties

September 2017 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

September 2017 Issue

In a deal which represents Asia’s largest private equity (PE) buyout, Global Logistic Properties (GLP), Asia’s biggest warehouse operator, is to be acquired by Nesta Investment Holdings Ltd for $11.6bn.

The acquirer, a consortium led by Chinese PE firms Hopu Investment Management and Hillhouse Capital Group, property developer China Vanke, Bank of China Group Investment and SMG, which is owned by GLP founder and chief executive Ming Mei, outbid an offer made by a rival consortium led by Warburg Pincus – the only other bidder to be shortlisted.

Nesta is a special purpose vehicle incorporated under the laws of the Cayman Islands as a wholly-owned subsidiary of Nesta Investment Holdings MidCo Limited. MidCo, in turn, is a wholly-owned subsidiary of Nesta Investment Holdings TopCo Limited.

The winning consortium’s offer consists of $3.38 in cash per share, which represents an 81 percent premium over the 12-month volume weighted average price and a 25 percent premium over the last full trading day before the acquisition announcement was made.

GLP preferred the Nesta bid to the Warburg Pincus offer due to its: (i) price certainty at significant premiums to historical prices; (ii) greater degree of deal certainty due to the limited conditionality of the bid; and (iii) likely completion within a defined timeframe which would reduce execution risk.

Managing a global portfolio of 55 million square metres, with dominant market positions in China, Japan, the US and Brazil, much of GLP’s success is due to domestic consumption and is a key driver of demand. Alongside being one of the world’s largest real estate fund managers, with assets under management of $41bn, in recent years the company has benefited from rising demand logistics facilities driven by a boom in e-commerce from clients such as Amazon.com Inc and JD.com Inc.

The Nesta/GLP joint announcement is the conclusion of an independent strategic review overseen by a special committee of the board of directors of GLP (comprising four independent directors). The review, which began in December 2016, was prompted following concerns expressed by the Singapore sovereign wealth fund, GIC, which owns 37 percent of GLP (the biggest shareholder).

Having become particularly concerned when GMP shares fell consistently over a two-year period, GIC then asked GLP to take action, with the warehouse operator calling in financial adviser JPMorgan and legal adviser Allen & Gledhill, to facilitate a review.

“Following our request, the GLP board of directors established a committee to lead, manage and oversee the review,” said GIC in statement. “As a major shareholder whose interest is aligned with all shareholders of GLP, GIC’s expectations have always been that the strategic review process conducted by GLP must be fair, robust and transparent, so as to maximise value for all shareholders.

“GIC has provided an undertaking to Nesta to vote in favour of the acquisition in respect of its aggregate shareholding interest of 36.84 percent in GLP, on and subject to the terms stated in the joint announcement,” concluded GIC. That said, although GIC has stated its support for the transaction, the wealth fund is free to accept an unmatched superior offer should one materialise.

Lead joint financial advisers for the Nesta consortium and providers of the resources confirmation related to the purchase were Citigroup, Goldman Sachs and Morgan Stanley. Additional financial advisers were DBS Bank and China International Capital Corporation.

In an unusual development, the acquisition of GLP is not believed to be conditional on receiving antitrust approvals, nor approval from the Committee on Foreign Investment in the United States (CFIUS). However, the acquisition will be effected via a scheme of arrangement and is expected to be completed in April 2018.

Fraser Tennant