GIC buys Europe's leading warehouse business for 2.4b euros

Singapore

SINGAPORE'S sovereign wealth fund GIC has embarked on the largest European property deal so far this year with the acquisition of a leading warehouse business for 2.4 billion euros (S$3.7 billion).

GIC inked a definitive agreement to acquire P3 Logistic Parks from TPG Real Estate and its partner Ivanhoé Cambridge - the real estate arm of Quebec's state pension fund manager - to tap into the booming e-commerce growth there as more businesses focus on direct-to-consumer home deliveries.

"GIC is already a substantial shareholder of many logistics platforms in Asia and the US," said GIC Real Estate chief investment officer Lee Kok Sun.

"P3 has a diversified and income-producing portfolio coupled with strong growth ahead with a substantial and well-located land bank. By working together with P3's strong in-house team, we can scale up through developments and acquisitions as well as drive portfolio value through leasing and value-add refurbishments," he added.

Private-equity fund TPG's real estate investment arm and Ivanhoé Cambridge had acquired P3 in October 2013 from Bahrain-based Arcapita which had filed for Chapter 11 protection in New York a year before. The Gulf investment firm had earlier sought to list P3 in London but the plans fell through as it couldn't get a favourable valuation amid a far-from-robust market environment then.

Since the acquisition, the group has grown into Europe's largest fully integrated logistics platforms. P3 has more than doubled its portfolio size following six add-on acquisitions in key European markets while warehouse properties have increased from 48 to just over 160 across nine countries, with a 3.3-million-square-metre portfolio from 1.5 million square metres previously. Its customer base has also tripled to more than 300.

A source with knowledge on the process said that with P3's business having dramatically improved, TPG began looking for a long-term shareholder to effect its exit strategy, which drew a "high level of interest" and, eventually, identified GIC as the "best choice" for the business.

"With the support of its new shareholder, P3 is well-placed to enter the next phase of its growth," said the firms in a joint statement issued on Monday, adding that it has a landbank of up to 1.4 million square metres of development potential.

"We are excited to partner with one of the world's largest sovereign funds in GIC, and we look forward to delivering the same success for our new shareholder. GIC's long-term investment strategy is closely aligned to our own approach, as a long-term owner and developer of high-quality assets," said P3 chief executive Ian Worboys.

P3 recently completed a 1.4 billion euro long-term refinancing to support its growth strategy. The transaction is subject to regulatory approval and is expected to close by the end of 2016.