Korean funds to invest $295 mn in Asian warehouse developer e-Shang: report

  • 2016-11-21

South Korean institutional investors will buy about 350 billion won ($295 million) worth of senior loans secured by distribution centers of Warburg Pincus-backed logistics firm, e-Shang Redwood Group, in their first investment in a foreign warehouse developer, a local newspaper reported.

Hana Asset Management Co. Ltd. will team up with three to four local institutions, including unidentified pension and savings funds, to purchase the senior loans of e-Shang Redwood, targeting an annual return of about 6%, the Maeil Buiness Newspaper said on Nov. 18, citing investment banking sources.

“Compared to a rapid growth of the e-commerce market in China and other Asian markets, new warehouse supply lacks significantly,” the newspaper quoted an unnamed financial investment industry source.

e-Shang Redwood owns distribution centers across Asia, including China, Japan and South Korea. The whole floor area of the warehouses owned by e-Shang span approximately 1.62 million square meters, according to the daily. Most of them are leased to top online commerce operators such as Amazon.com Inc. and Chinese e-commerce companies, Alibaba.com and JD.com. e-Shang Redwood is the largest third-party landlord for leading e-commerce companies in China, it said in its web site.

Logistics properties have been emerging as an attractive alternative asset class with higher expected returns than office buildings.

Korea Investment Corporation and the Teachers’ Pension of South Korea will invest in a U.S. warehouse portfolio fund for an undisclosed amount, the pension fund said on Nov. 8. The investment follows the 120 billion won purchase of an Amazon’s logistics center in San Antonio, Texas, by South Korea’s Meritz Securities Co. Ltd. and domestic asset managers in July. Early this year NH Investment & Securities Co. Ltd. and Hana Financial Investment Co. Ltd. bought an Amazon’s distribution center in Poland for 100 billion won.

e-Shang was founded in 2011 by private equity firm Warburg Pincus and two Chinese investors. It was merged with Redwood Group early in 2016.

<Edited by Yeonhee Kim>