PGGM injects $160m into ESR’s China fund

The Dutch pension fund has made its third equity commitment into e-Shang Redwood’s China logistics vehicle.  

Dutch pension fund PGGM has made an additional $160 million commitment to e-Shang Redwood’s (ESR) China logistics real estate fund.

Following the latest round – the third equity commitment by the pension fund into the vehicle – PGGM has invested $430 million in total in the Redwood China Logistics fund (RCLF).

The Singapore-based logistics fund manager Redwood initially launched RCLF in 2012 with a $400 million capital target, but decided to remove the set target in early 2014. Since then, while the fund has stopped being marketed to other investors, the existing LPs continue to have a right to increase their capital commitments. The vehicle is expected to have a 10-year life and the firm is targeting value-add returns from its investments. PGGM is the majority investor in RCLF.

“PGGM is a long term investor with patient capital and has been a seed investor with Redwood in their first investments in China logistics property since 2012, “Thijs Schoenaker, senior investment manager with PGGM Private Real Estate said on the fresh equity upsize.

“Over the past years they have built up a sustainable and high quality portfolio and platform in China. The merger with e-Shang will further strengthen the platform and add value for their customers in Asia. As a result, PGGM is keen to continue to invest with ESR – as one of our strategic operating partners in Asia.”

In a joint statement commenting on the commitment, Charles de Portes, president of ESR; and Michael de Jong-Douglas, the group’s managing director said: “Capturing the strong momentum of logistics real estate growth in China, PGGM’s increasing investments with us in the region since 2012 have proven timely for long-term value creation. PGGM continues to be a key investment partner and now holds over $600 million of equity commitments with ESR across China and Japan.”

Last month, Redwood and e-Shang, the Shanghai-based logistics developer and operator, merged to create ESR, one of the largest logistics investments platform in the region with $4 billion in estimated assets under management.