On Sunday, CPP Investments, the independent investment management organization that manages more than $457.7 billion in assets on behalf of the Canada Pension Plan, announced a new Indonesian joint venture with Sydney-headquartered logistics real estate specialist LOGOS. Together, the two firms will develop modern logistics facilities in Greater Jakarta.
CPP Investments has committed $200 million to the joint venture, which will develop a diversified portfolio of facilities targeted at third party logistics (3PL), data center, and industrial tenants.
“One of the key investment themes for CPP Investments has been Asia’s growing middle class and domestic consumption,” said Jimmy Phua, Managing Director and Head of Asia Real Estate Investments at CPP. “The growth in Indonesia’s e-commerce market has driven the demand for modern logistics facilities. We are pleased to be furthering our partnership with LOGOS and strengthening our position in Indonesia’s logistics market.”
Rising urban middle class
Citing research from Bain Capital, LOGOS notes that Indonesia’s rapidly expanding middle class and urbanization trend are fueling a boom in e-commerce that could value the sector at $124 billion by 2025. Despite secular tailwinds, retailers and e-commerce players are hampered by Indonesia’s archipelagic geography and its fragmented and relatively immature logistics sector. As a business enabling infrastructure, LOGOS notes, warehouses are key in attracting foreign direct investment from multinational companies.
The new logistics partnership marks the second joint venture between CPP Investments and LOGOS in Indonesia. In 2017, the two entities partnered with another international investor to acquire modern logistics properties in the Indonesian market. The first venture, still in operation, includes a number of logistics properties, including the Metrolink Logistics Hub, Cikarang Logistics Park, Cibitung Logistics Hub and Cileungsi Distribution Center.
“We are seeing growing demand from both multi-national and domestic customers for high-quality logistics space in Indonesia, which is underpinned by the region’s economic drivers of e-commerce, manufacturing and diversification to decentralized supply chains,” said Stephen Hawkins, LOGOS Managing Director. “We are very pleased to be working with a long-standing partner in CPP Investments to meet this demand and, through both ventures, deliver up to US$1 billion of high-quality logistics facilities to this market over the coming years.”
LOGOS has reportedly identified a strong pipeline of opportunities for this new venture on which it will execute over the next 12 months.
From the IFC
In December, LOGOS announced that the International Financial Corporation (IFC), a member of the World Bank Group and the world’s largest global development institution focused on private sector investment in emerging markets, would provide LOGOS with up to $120 million in debt financing for the development of two logistics estates in the greater Jakarta area, a development expected to generate 1,000 jobs during the construction phase, along with hundreds of indirect jobs created by potential tenants, including global third-party logistics firms and large e-commerce groups.
Elsewhere in the region, in August, LOGOS announced the launch of its first industrial logistics venture in Vietnam, in partnership with an unnamed global institutional investor, developing high-quality facilities in Greater Ho Chi Minh, Greater Hanoi and Greater Danang, a deal that marked its fourth successful fund closing of the year and over $1 billion in logistics real estate investments across Asia-Pacific, despite volatile market conditions due to covid-19.
Currently, LOGOS’ Asia Pacific portfolio comprises 100 logistics estates and $10.2 billion in assets under management, spread across Australia, China, Singapore, Indonesia, Malaysia, Vietnam, India and New Zealand. In addition to its founders, LOGOS shareholders include some of the world’s largest fund managers, including Ivanhoé Cambridge, a Canadian real estate industry leader investing in in high-quality properties and companies with C$64 billion in global real estate assets, and global real assets investor ARA Asset Management, which took a majority stake in the company in March 2020.
