Deals targeting logistics companies in China have delivered the best start to the year on record, generating bumper profits for private equity firms. About $5.5 billion worth of acquisitions of Chinese logistics firms have been announced so far this year, the strongest first quarter ever, according to data compiled by Bloomberg. Warburg Pincus LLC and MBK Partners are among the firms that have recently profited from selling their stakes in companies in the red-hot sector.
Buyout firms have been betting heavily on assets like warehouse space well before China’s increasingly affluent consumers joined the shift toward e-commerce, which was turbo-charged by the coronavirus pandemic. Even after these latest transactions, dealmakers see investment in Chinese logistics assets continuing to rise.
“We’re seeing an increase in valuation for logistics properties, particularly in higher growth areas around China’s first-tier cities,” said Justin Wai, a Hong Kong-based managing director of real estate at Blackstone Group Inc. “This is a reflection of the underlying strength of the warehouse leasing market as well as demand from e-commerce.”
Blackstone began investing in logistics more than a decade ago, driven by conviction that e-commerce trends would spur the need for warehouses. Logistics is now the firm’s largest exposure overall, comprising more than a third of its real estate portfolio globally.
Source: BNN Bloomberg
By Cathy Chan, Manuel Baigorri and Vinicy Chan
