GIC, Dutch pension funds and ESR Cayman to form US$1B fund for China industrial property

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Singapore sovereign wealth fund GIC, ESR Cayman and a pool of Dutch pension funds have entered a deal to form a co-investment platform to invest up to US$1 billion in warehousing and industrial mixed-use properties in China, ESR Cayman said in a filing to SGX Friday.

Called the New China Development Platform, the fund will include ESR Cayman’s subsidiary ESR Investor, APG Investor, which is the depositary of APG Strategic Real Estate Pool, a fund for collective investments by Dutch pension funds, and RECO Investor, which is an investment holding company indirectly owned by GIC (Realty), an investment holding company for GIC’s real estate investments.

“The New China Development Platform further bolsters the group’s relationship with two leading institutional investors and allows the group to further expand its investments in China, where the group foresees continuous growth in the logistics market,” ESR Cayman said in the filing.

ESR Investor will contribute up to US$200 million for a 20 percent stake in the platform, while APG Investor and RECO Investor will contribute up to US$400 million each for their respective 40 percent stakes, the filing said.

The agreement also includes a “re-up option,” which if exercised after hitting capital commitment targets, would see ESR Investor contribute up to US$400 million, while APG Investor and RECO Investor would contribute up to US$800 million each, the filing said.

ESR Cayman said its portion of the investment would be funded by internal resources, as did APG Investor and RECO investor.

The agreement calls for forming three offshore joint ventures, which will have an initial term of six years and may be extended by terms of one year if the three shareholders approve; the initial investment period for each joint venture is four years, which may be extended by another four years if the re-up option is exercised, the filing said.

APG Investor also holds around 6.9 percent of ESR Cayman and GIC holds around 5.96 percent, the filing said.

The deal is subject to a six-month deadline for meeting anti-monopoly approvals and other conditions, the filing said, adding the joint ventures are expected to be formed by the end of October.