Global Logistic Properties (GLP SP) BUY
Strategic Review of Business Options
What’s New?
Bloomberg's Reported Potential Consortium Investors
source: Bloomberg, UOB KH
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Strategic Review of Business Options
What’s New?
- Undertaking strategic review of options for its business upon GIC's request. GLP announced last night that following GIC's request, it has appointed J.P Morgan as its financial adviser to make preliminary approaches to various parties on viable business options as part of the review. GLP's announcement was prompted by Bloomberg, which reported that JPMorgan was tapped by GLP to carry out a review after attracting takeover interest from a consortium of investors (China investment Corp, Hopu Investment and Hillhouse Capital).
- GLP, however, has stated that no definitive transaction has been entered into with any party (including the consortium mentioned by Bloomberg) just yet. As such, no assurance can be made on a transaction materialising from the strategic review.
- A takeover bid would be unsurprising given GLP's compelling valuations, trading at 33% discount to our RNAV of S$3.06. Additionally, long-term investors would likely be viewing the scalability of the fund management business over the next 5-10 years, which in our opinion, could expand valuations to S$4.25 (Initiation Report). We also note major shareholder GIC’s recent solo S$3.7b purchase of a European warehouse portfolio, which could have resulted in GLP being a leading warehouse player in Europe if it had participated in the deal (GLP’s CEO Ming Z Mei has repeatedly expressed his interest in Europe). GIC (37% stake in GLP) deciding to forge ahead with the Europe acquisition without GLP, could hint at other corporate strategies supplanting further geographic diversification.
- Alleged Chinese government curbs on overseas investment.. A separate document seen by the South China Morning Post said to be the minutes of a central bank meeting on cross-border capital controls, said that from now until September of next year, Beijing would ban: deals involving investment of more than US$10 billion; mergers and acquisitions valued at more than US$1 billion outside a Chinese investor’s core business; and foreign real estate deals by state-owned enterprises involving more than US$1 billion.
- ..Though impact on a potential privatisation is unclear. While the abovementioned investor consortium include Chinese firms like China Investment Corp (SOE firm) and Hopu, we note that the Chinese government could be less inclined to view the potential privatisation as a "foreign investment". As China logistics assets form 56% of GLP's NAV, the Chinese authorities could see GLP's potential privatisation as a strategic move for further control of domestic assets (both CIC and Hopu are either partners in GLP's fund management business or hold a significant stake in its China assets).
Bloomberg's Reported Potential Consortium Investors
| Relationship with GLP | |
| Hillhouse Capital Management | 8% stake in GLP |
| China Investment Corp | Partner in GLP Japan Income Partners I and GLP Brazil Income Partners I |
| Hopu Investment Management | Part of China Consortium (31% stake in GLP’s China assets) |
source: Bloomberg, UOB KH
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
