Transactions - JULY 11, 2017

UPDATED: GLP considers platform bids amid transparency complaints

by Jennifer Molloy

As part of a strategic business review of its options, Singapore-based Global Logistic Properties is currently considering shortlisted bids to acquire the company, but the proposal process has come with some controversy, and an even more recent snag.

According to Bloomberg News — which values GLP at $9.7 billion (or $14.2 billion, including debt) — greater transparency and timeliness in answering questions and providing financial information had been sought for months by bidders (which then included a Warburg Pincus consortium, Blackstone and RRJ Capital) who had been competing for the platform against a GLP management­–backed group, which includes Ming Mei, GLP’s CEO, as well as Chinese private equity firms Hillhouse Capital Management and Hopu Investment Management Co.

But Reuters reported July 2 that the list of bidders had shortened to just two: the management-backed group and the group led by Warburg Pincus. And GLP confirmed July 3 that, while it is considering bids, it is not guaranteed a bid will be accepted.

But just a week later, on July 10, the Financial Times stated the Warburg Pincus group may pull out of its non-binding bid, citing people familiar with the matter. The reason for the potential bid withdrawal concerns approximately a third of GLP’s Chinese business, which in 2014 was acquired by a different consortium that also includes GLP’s CEO Mei and Hopu Investment Management. According to the Financial Times, provisions in the 2014 deal allow veto power by this group over a number of things a new owner of GLP may wish to do with these Chinese assets.

This further complicates the original concern voiced by Bloomberg News about the entire bidding process: whether the management-backed consortium, “has an advantage over other buyers with privileged access to information.” Previously, in addition to complaints from bidders, Bloomberg News reported GLP’s largest stakeholder, GIC, Singapore’s sovereign wealth fund, in May called on GLP to be more responsive to bidder requests.

In response to these complaints, GLP extended the deadline for final offers to this past June 30, and took additional steps to address transparency concerns.

According to GLP’s FY2017 annual report, released June 15, GLP owns and manages a 592 million-square-foot global portfolio of modern logistics facilities — with dominant market positions in Brazil, China, Japan and the United States — as part of its $38.7 billion in assets under management.

Through managed funds, GLP’s annual report states it has nine partners in China, with fund management AUM valued at $10.0 billion; four partners (including CBRE, China Investment Corp. and the Canada Pension Plan Investment Board) in Japan, with AUM of $10.8 billion; 13 partners (including China Life Insurance Co., CPPIB and GIC) in the United States, with AUM of $14.8 billion; and four partners (including CIC, CPPIB and GIC) in Brazil, with AUM of $3.1 billion. In total, GLP has 18 partners from Asia, Europe, the Middle East and North America.

As the e-commerce trend increases globally, the appeal of logistic assets to a variety of investors continues to grow. “We see the line between online and offline retail blurring, as online shopping becomes the norm,” GLP notes in its annual report. “Five to 10 years from now, we believe we will probably not hear the term ‘e-commerce’ anymore — it will just be another channel of everyone’s retail strategy.”

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