GIC’s €2.4bn (£2.1bn) purchase of logistics specialist P3 is expected to prompt its entry into the UK market and give it a strategic advantage in buying Logicor.
GIC is one of just a few logistics players that would and is able to make a solo equity-heavy bid for the €11bn Logicor business when Blackstone begins its expected twin-track sale and IPO of the business next year. Through the acquisition of P3, GIC now has a plethora of comparables and an expert team to help make a bid.
Ian Worboys, P3’s chief executive, said he wanted to expand the company’s geographic presence by “one or two” countries, including the UK, in the near future. It is currently present in 11 countries with a bias towards central and eastern Europe.
P3 also attracted bids from CPPIB, CBRE GI and Macquarie but each of the losing parties were expected to write equity cheques of around €500m and were looking to then syndicate their stakes, making a deal with GIC more straightforward. GIC paid €1bn in cash and took on €1.4bn of debt, which was refinanced last month.
GIC has no plans to syndicate any of its equity stake on completion, which is due in six weeks. The Singaporean sovereign wealth fund has a preference to retain as much control of investments at the early stages as possible.
GIC opted to bid on its own as opposed to through Global Logistics Properties, the Singapore-listed logistics company in which it owns a 37% stake. GLP is currently subject to takeover interest from CIC.
“GIC has always had an interest in logistics and it was looking for a European platform. At the same time, Ivanhoé and TPG had a three- to five-year ownership view,” said Worboys.
“Logistics is the flavour of the decade and that was reflected in GIC and others competing for us,” he added.
GIC has sold core assets this year, including more than €1.1bn of office and hotel assets in Paris, in order to make more strategic purchases such as P3.
P3 had initial discussions with GIC a year ago. A formal sales process kicked off in the summer through Eastdil Secured.
GIC has been looking to make a major play in the central and eastern Europe region for a decade, because of its strong growth dynamics, and has previously been an investor there through funds run by Prologis.
The logistics market in the CEE region is expected to grow, owing in part to enhanced railway links through Russia and to China over the next decade.
Of P3’s 35.5m sq ft portfolio, around 6.5m sq ft has been developed by the company under the ownership of sellers TPG and Ivanhoé Cambridge, which have doubled the size of the company since they bought it in 2013. P3 is on site in another 11 locations and has a 3.3m sq ft consented landbank, giving it significant upside.
With a large amount of customers looking to expand their geography, P3 wants to be able to act as their conduit into new countries as it expands.
• To send feedback, email david.hatcher@estatesgazette.com or tweet @hatcherdavid or @estatesgazette
