Warburg Pincus doubles down on Asia logistics

The early investor in Asian warehouses used for ecommerce looks to extend the play to Vietnam where it says the sector is at an “inflexion point”; capital flows into the emerging market hit a record last year.

Private equity firm Warburg Pincus and Vietnam’s Becamex IDC said on Monday that they had formed a joint venture to develop institutional-grade industrial and logistics properties across Vietnam, betting on the growth in ecommerce and the opening up of the country as more foreign capital flows in.

The new partners are committing a total of $200 million to the venture.

Warburg Pincus has solid credentials in logistics. It was early to recognise the impact of e-commerce on logistics and has invested in 28 companies in the sector. Last year it lost out to a Chinese consortium on one of the biggest warehousing companies in China, Global Logistic Properties.

The new joint venture, BW Industrial Joint Stock Company, is targeting a mix of multinational corporations looking to expand in the emerging market and local logistics companies as tenants.

Properties the JV will develop include warehouses and factories, as well as other industrial-related commercial properties such as flex office space, R&D centres, and data centres. The platform will be seeded with two projects by Becamex, a person familiar with the partnership said.  

“The logistics and industrial real estate market in Vietnam is in the 'early innings' and at an inflection point for outsized growth,” said Jeffrey Perlman, head of Southeast Asia at Warburg Pincus.

In 2017, foreign direct investment hit yet another record high of $36 billion, up over 40% from the previous year. The manufacturing-processing industry remained the biggest recipient, accounting for over 40% of total FDI in 2017.

Established in 1976, Becamex develops large-scale industrial townships with one of the largest industrial landbanks across Vietnam. Over the past 20 years, Becamex has created more than 10 industrial parks with Fortune 500 companies as tenants.

Becamex has formed partnerships with foreign players in the past, such as Japan’s TOKYU Corp, and with Sembcorp, a Temasek-sponsored industrial group.

“Recent government policies (including significant trade deals) and a strong focus on infrastructure have transformed Vietnam into one of the world’s most attractive investment destinations which in turn will continue to create outsized demand for modern institutional-grade industrial and logistics properties and services,” Nguyen Van Hung, Becamex’s chairman, said in a statement.

The Vietnamese government has been trying to improve the country's infrastructure to attract foreign investment and replicate China’s success story of the early 2000s. It has implemented policies on foreign land and property ownership over the past two years as well as investment incentives. 

Vietnam ranks as one of the fastest growing economies in Southeast Asia as well as globally with a GDP growth rate of 6.8%.

In Asia investments include ESR, which manages or owns over $12 billion of logistics warehouses across the region; D&J China, an industrial and business parks developer in China with an AUM of over $4 billion; India’s Embassy Industrial Parks; and ZTO Express, a Chinese express delivery company.

Warburg Pincus started investing in Vietnam in 2013. Since then, Warburg Pincus has committed over $1 billion across Southeast Asia, including in Vincom Retail, Lodgis Hospitality, ARA Asset Management, Go-Jek, NWP, Trax, and others.

Vincom Retail, a joint venture retail platform established between Vingroup and Warburg Pincus in 2013, has grown into the largest shopping mall developer and operator in Vietnam. Its $740 million listing on the Ho Chi Minh Stock Exchange last November was the largest-ever IPO in Vietnam.

On the new joint venture with Becamex, Latham Watkins and Vilaf offered Warburg Pincus legal advice while KPMG was the firm's financial adviser.

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media