Fosun Group, one of China’s largest privately-owned conglomerates, has formed a domestic joint venture to develop a nationwide network of warehouses in China specifically for pharmaceutical companies, PERE has learned.
According to a source within Fosun, the firm has sealed a 60:40 strategic partnership with SinoPharm Group, a Hong Kong-listed pharmaceutical company in which one of Fosun’s subsidiaries holds an approximately 26 percent stake. Although the JV is still in early stages, Fosun and SinoPharm are expected to invest between $500 million and $1 billion for the first phase of the partnership. Fosun is understood to be expecting value-added returns from the partnership over the long-term, but the exact IRR has not been set.
According to an internal memo seen by PERE, phase I is expected to be completed within three to five years. It is expected to result in 32 million square feet of distribution and delivery centers across China. The timing, however, is understood to be dependent on how easily Fosun can secure the land, according to the source.
Fosun and SinoPharm are seeding the JV with a 53,000 square foot development in Hangzhou that will be leased out to SinoPharm for between 15 and 20 years upon completion.
Although the development partnership is primarily for building out SinoPharm’s distribution network as the pharmaceutical company expands nationally, third-party pharmacies will not be excluded. It is understood that some other tenants could be brought in during phase I.
This is not Fosun’s first foray into logistics. Last May, the company bought a 10 percent interest in a RMB5 billion (€590 million; $803 million) logistics project with Alibaba Group as part of a consortium the online retailer formed in early 2013 with the intent of investing RMB100 billion in Chinese logistics over the next five to eight years.