AN indirectly-owned subsidiary of GIC, Singapore's sovereign wealth fund has entered into an agreement with an ESR Cayman unit and a fund depositary to jointly invest as much as US$1 billion initially, in warehousing and industrial properties in China.

RECO Investor - an investment holding company and indirectly wholly-owned by GIC (Realty) - ESR Investor and APG Investor are setting up the New China Development Platform, a fund that will invest in warehousing or warehousing and industrial mixed-use properties in China that will be sourced, developed and managed by the ESR Cayman group of companies.

ESR Cayman stated in its statements on Aug 13 to the Singapore Exchange and the Stock Exchange of Hong Kong, where it is listed, that GIC (Realty) is the investment holding company for GIC's real estate investments. APG Investor is the depositary or trustee of APG Strategic Real Estate Pool owned by some Dutch pension funds.

The New China Development Platform will have a maximum initial capital commitment of US$1 billion, with RECO Investor and APG Investor each contributing up to US$400 million. ESR Investor will contribute US$200 million at the maximum.

Should RECO Investor or APG Investor exercise their option to subsequently increase their respective capital commitments to up to double their initial investment amounts, ESR Investor will then contribute up to US$400 million, which is 20 per cent of the total capital commitment by all the investors.

Offshore joint ventures will be incorporated to hold the projects in which the fund invests. Each offshore joint venture has an initial term of six years, which may be extended for further terms of one year by unanimous approval of all the shareholders of the offshore joint venture.

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Each offshore joint venture has an initial investment period of four years, which may be extended for a further four years upon the exercise of the options by the investors to bump up their investments.

ESR Cayman stated that its units will provide investment management and asset management services to the offshore joint ventures and earn management fees.

GIC currently holds 5.96 per cent of the shares of ESR Cayman, the statement noted, and GIC (Realty) is an investor in certain funds and investment vehicles in which ESR Cayman group has co-invested and is managing.

ESR Cayman closed 3 per cent lower at HK$22.65 on Friday, before this announcement was made.