Global pension funds raise bets on South Korea logistics assets as pandemic spurs next wave of e-commerce transactions
- Canadian and Dutch pension fund managers are teaming up with ESR for their second Korean logistics joint venture
- E-commerce revenue in South Korea grew to US$92.4 billion in 2018 from US$16.2 billion in 2009, according to Statista
The Canada Pension Plan Investment Board, Dutch pension administrator APG and Hong Kong-listed ESR Cayman are putting US$1 billion into a joint venture called ESR-KS II, according to an email statement on Thursday. The vehicle, on a 45:35:20 equity participation basis, can grow up to US$2 billion.
The new venture is a successor to their US$1.15 billion South Korean investment from late 2015, and a bet on rising demand industrial and warehouse properties to process online transactions. Total e-commerce revenue in South Korea grew to US$92.4 billion in 2018 from US$16.2 billion in 2009, according to data compiled by Statista.
Coupang, a leading Korean e-commerce retailer, recorded about 64 per cent jump in revenue in 2019, the second time annual revenues climbed more than 60 per cent, according to media reports. Daily deliveries had risen to 3 million since mid-February, compared to 2.2 million in February last year, the company has said.
“Asia’s consumer sector has been one of our key investment themes,” said Jimmy Phua, head of Asia Real Estate at CPPIB, which managed C$420.4 billion (US$297 billion) at the end of 2019. The rapid growth in South Korea’s e-commerce market is driving demand for high quality logistics facilities in the country, he added.
ESR-KS II aims to invest in logistics properties in Seoul and Busan, the two cities with the highest consumer spending in the nation. Asia’s fourth-largest economy shrank by 1.4 per cent last quarter, the most since the final three months of 2008, with exports slumping because of the pandemic.
Yet, the logistics sector is showing resilience in these uncertain times, said Graeme Torre, head of real estate at APG Asset Management Asia, a unit of Dutch pension administrator APG that manages about €533 billion (US$577 billion). That will allow the venture to capture the next wave of growth and opportunity, he added.
