China’s retail major unit puts $306m in logistics platform ESR Cayman

Photo: ESR.

The logistics unit of China’s online retail giant has invested $306 million in ESR Cayman, a pan-Asia logistics real estate developer, in a move to broaden its business in key markets across Asia, ESR announced on Tuesday.

The investment comes after JD Logistics raised around $2.5 billion from top private equity and institutional investors, including Tencent and Sequoia China, in February.

Both companies will be exploring collaboration in property development, fund management, and investments across the region.

“The investment in ESR will further strengthen our relationship to solidify and expand our logistics networks,” said Zhenhui Wang, CEO of JD Logistics.

Formed in 2007, the logistics arm of JD is looking to expand across Southeast Asian countries like Vietnam, India, Philippines and Malaysia. A warehouse fulfilment centre in the U.S. is known to be among the plans, leveraging on its relationship with investor Walmart.

Just last week, the e-commerce platform acquired 10 per cent stake in Hong Kong-listed China Logistics Property Holdings for $114.55 million.

“Leveraging JD’s network effect and smart supply chain capabilities, together with ESR’s exceptional penetration into both developed and emerging markets across Asia Pacific, this strategic alliance is poised to capitalize on mega trends in the region,” said Jeffrey Shen and Stuart Gibson, Co-CEOs of ESR.

ESR, a pan-Asia logistics real estate developer, was co-founded by senior management and PE firm Warburg Pincus and is backed by investors including Goldman Sachs. To date, ESR has managed about $12 billion in total assets.

Both companies are keen to ride the wave of China’s online retail market, projected to reach $1 trillion by 2020. JD is also looking to expand its last-mile efficiencies like developing the use of automation, drones and robotics. The team has been working out with a few methods from vehicles to electric bikes and drones.

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