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E-Commerce Explosion in China Behind GLP’s New $2.1B Fund

Global logistics company GLP closed on its newest fund, citing China‘s strong e-commerce growth as a factor behind the creation of the investment facility.

With a total investment capacity of 15 billion yuan ($2.1 billion) in assets under management, the GLP China Income Fund I is also driven by investor demand and increasing domestic consumption in the world’s second-largest economy.

Of the seven institutional investors in the new fund, six are new to GLP, which the company said indicated continued demand by investors for opportunities in the logistics sector. The new fund is fully seeded, with 34 stabilized, income-producing assets in 18 cities across China, which GLP said “remains the largest consumption opportunity in the world, with an advanced and rapidly-growing e-commerce market.”

“Despite the current environment, we received significant interest from institutional investors to participate in GLP CIF I,” Teresa Zhuge, executive vice chairman of GLP China, said. “We believe it is a testament to GLP’s high-quality, modern logistics assets and our fund management and operational capabilities, which allow us to drive value through all phases of the asset life cycle. Investor demand for China logistics real estate is exceptionally strong and we are pleased to provide our institutional investor partners access to this market opportunity.”

This is the third vehicle in China to support GLP’s capital recycling strategy. The company also manages GLP China Value-Add Venture I & II, which were launched in 2018, making $7 billion of income funds in China. GLP manages six China real estate and private equity funds, which have approximately $19 billion in assets under management.

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The company said it is committed to maintaining a leadership position in China by positioning its logistics real estate network to serve the demands arising from the growth of domestic consumption, including online shopping, as well as focusing on identifying and implementing technologies to build more efficient modern logistics ecosystems that will create value for customers and investors.

IHS Market said last week that while the government’s lockdown measures to combat the COVID-19 virus outbreak paralyzed most facets of mainland China’s economy, “the necessary conditions for recovery appear to have materialized.”

The national average of large industrial enterprises’ work resumption rate has reached 97 percent, although recovery is lagging in more resource-constrained small and medium-sized enterprises, with only 80 percent of them having resumed operations, IHS reported.

According to China’s Bureau of Statistics, in the first quarter that was highly impacted by the coronavirus, per capita disposable income–a key barometer of retail spending–among Chinese residents increased 0.8 percent in nominal terms over the same period last year and showed a real decrease of 3.9 percent after deducting price factors.

The bureau reported that in March, total retail sales of consumer goods fell 15.8 percent year on year. From January to March, total retail sales of consumer goods was down 19 percent year on year.

In the first quarter, national online retail sales dipped 0.8 percent year on year. Among them, online retail sales of physical goods increased 5.9 percent, accounting for 23.6 percent of the total retail sales of consumer goods. Among online retail sales of physical goods, food and consumer goods increased by 32.7 and 10 percent, respectively, while clothing goods decreased by 15.1 percent.