Three parties have made the final shortlist to buy Blackstone’s gigantic European logistics business Logicor.
China Investment Corporation, the Chinese sovereign wealth fund; Global Logistic Properties, Asia’s largest logistics company; and a joint venture between Mapletree Investments and Temasek Holdings, two investment vehicles connected to the government of Singapore, make up the trio.
It is understood that as long as a bidder agrees a deal at firmly above €12bn Blackstone is prepared to progress with a direct sale as opposed to a listing. All three have indicated that they are willing to do so. Eastdil Secured is advising Blackstone on the prospective direct sale.
While Blackstone’s bankers that are preparing the prospective IPO – Goldman Sachs, Morgan Stanley, Citi and Bank of America Merrill Lynch – are maintaining that they can get a greater value for the business in the public markets, the private equity firm is happy to do a deal directly, potentially at a slightly reduced price, due to reduced execution risk.
A private sale also allows Blackstone to take its money off the table in one fell swoop as opposed to having to retain an interest within a listed vehicle and the competition between the parties means that a figure could be struck nearer to €13bn than €12bn.
As long as the bidders maintain their level of interest and a deal progresses with one of them, such a private sale would be a major blow to the London Stock Exchange. Logicor had been anticipated as the largest IPO since the £36bn listing of mining and commodities firm Glencore in 2011.
The joint venture bid between Mapletree Investments and Temasek Holdings shines a spotlight on the somewhat confusing relationship between the two parties and Singaporean sovereign wealth fund GIC. GIC bought European logistics firm P3 for €2.4bn in November and appeared an obvious buyer for Logicor with Madeleine Cosgrave, GIC’s head of European real estate telling EG last December of its interest.
However, GIC operates autonomously from Temasek and Mapletree and has a different cost of capital and objectives.
GIC is the country’s sovereign wealth fund established to manage its foreign reserves and surpluses generated. Temasek is a separate investment company that the Singaporean government established to manage an eclectic portfolio of investments previously managed by the ministry of finance, which often takes strategic stakes in companies. Mapletree is the real estate focused arm of Temasek which, as well as investing Temasek’s money, also acts a third-party manager of private equity funds and listed companies.
The Singaporean government is also intertwined with GLP’s bid. The Shanghai-headquartered company is listed on the Singapore Stock Exchange and GIC is the company’s largest shareholder, with a 36.9% stake. CIC alongside Hopu Investment Management and Hillhouse Capital Management made a play for the company last November, which prompted GIC to request a strategic review of GLP, which has in turn led to a sales process. Warburg Pincus and Blackstone itself are reported to be amongst the interested parties.
It is possible that the ongoing uncertainty over GLP’s own ownership may be a barrier to it making a successful bid for Logicor. However, the businesses have long been mooted as having potential operational synergies and would be a natural extension of Blackstone’s $8.1bn sale of its US logistics platform to GLP and GIC in 2015. If a sale of Logicor to GLP does not happen, there will still likely be speculation over how the two businesses might be brought together at a later date.
CIC also has a very close relationship with Blackstone and is one of the biggest investors in the company’s funds. The pair have a history of doing deals with each other and in 2014 CIC bought west London business park Chiswick Park from Blackstone for £780m.
A decision on which party to progress with is expected to be determined around the end of the second quarter.
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