GLP

GLP: Second largest shareholder UK-based hedge fund Lone Pine Capital (LPC), has bowed out of its entire 7.27% stake in GLP on 21 May, disposing to Chinese investment fund Hillhouse Capital Management for $963.5m.

The married deal of 351.6m shares was crossed at market price of $2.74/share against its three-month volume weighted average price of $2.64/share.

According to its website, Hillhouse is founded by Zhang Lei and is a long-term investor which manages capital for institutional clients such as university endowments, foundations, sovereign wealth funds, pensions and family offices. Coincidentally in 2012, Hillhouse was likened to LPC by Financial Times, owing to its low profile but high returns.

GLP has been well sought after by Chinese investors in the past few months. In Feb '14, it entered into a landmark US$2.5b investment agreement with a Chinese consortium, including Bank of China, China Life and HOPU Funds, which now owns 33.8% of GLP China.

Following the deal, GLP struck several collaborative tie-ups with Chinese partners:
- Apr '14: A convenient financing deal with Bank of China
- Aug '14: JV with China's largest state-owned logistics firm China Materials Storage and Transportation Development Co to be its exclusive developer
- Oct '14: Strategic partnership agreement with China Development Bank Capital to develop logistics infrastructure

These alliances have given GLP a unique advantage over its competitors, by providing access to development land banks and financial resources in China that would otherwise not be easily available to foreign companies. Of the 3.3m sf of development starts in FY15, 21% or 700,000 sqm was facilitated by its consortium investors.

With an estimated US$2.5t to be invested in the industry over the next 15 years, China’s logistics demand per capita is expected to catch up to within one-third that of the US.

Market Insight remains sanguine on the counter, which sits in the Growth portfolio.

Bloomberg consensus has 18 Buy and 2 Hold ratings on the logistics player, with average 12-month TP of $3.17.