GLP plants $1.6bn flag in the private equity sector – Exclusive

The Singapore-based logistics giant aims to use third-party capital to fund new businesses which are ‘enhancing efficiency in the logistics industry.’  

GLP, the logistics real estate firm, has diversified into private equity with the launch of a platform and its first fund, PERE and sister publication PEI can reveal.  

Mei: thought it time to institutionalize logistics technologies business

 The Singapore-headquartered firm, which manages approximately $50 billion of logistics real estate assets, is expected to announce the platform and vehicle later this week.

Through Hidden Hill Capital, GLP has already raised 10 billion yuan ($1.6 billion; €1.3 billion) for the fund, called Hidden Hill Modern Logistics Private Equity Fund.

The capital will be deployed into “companies employing technology to enhance efficiency in the logistics industry,” co-founder and chief executive officer Ming Mei told the two publications.

Mei said the capital, raised from a mix of investor types, like insurance companies including China Post Capital, other “strategic investors and institutions,” was garnered from reverse inquiries.

“We started investing GLP’s balance sheet capital in adjacent emerging technologies – robotics, AI – and, over time, we had institutional investors coming to ask us first for advice, then if they could invest alongside us. We thought it was maybe time to institutionalize it.”

The fund looks similar to other private equity vehicles. It has a seven-year life span and two one-year extensions. Mei declined to comment on specifics relating to fees, but described them as a “traditional 2-and-20 type arrangement.” He said investors should expect net internal rates of return “north of 20 percent.”

The 10 billion yuan raised constitutes a first close, he said, but more capital – potentially a US dollar sleeve – could be raised in the same vehicle. GLP’s own investment in the vehicle accounted for 2 billion yuan of the capital.

GLP “is committed to expanding this platform through establishing new funds and further asset recycling,” according to a statement from the company due to be released this week.

Hidden Hill’s investment activity will be predominantly focused on China and is being led by two GLP executives – Higashi Michihiro and Richard Dong. “We are not limited to China, but at this point – because of our leading platform – this is where we are focused,” said Mei. “We expect the opportunity to develop in other regions as well.”

Mei formed GLP – originally known as Global Logistic Properties – alongside his mentor, the late industrial property veteran Jeff Schwartz, via a $1.3 billion purchase of Chinese and Japanese assets from rival logistics real estate firm Prologis in 2009.

Nine years later, the company has grown from around 65 million square feet of real estate under management in those two markets on day one to almost 460 million square feet today across Asia, the US, Europe and Brazil.

Significantly, it has also expanded its operation in areas not directly focused on logistics real estate. In March, it formed its first infrastructure investment partnership, with Toronto-based Brookfield Asset Management to invest $2 billion in solar panels on about 20 million square feet – roughly 10 percent – of its Chinese rooftops from which tenants can benefit from renewable energy supplies. Like the private equity fund, that too has the scope to extend into other geographies.

Last month, PERE published a rare interview with Ming Mei about his professional life so far. To read it, click here.