Chinese e-commerce retailer JD.com has invested $306m in ESR Cayman, a logistics fund developer, which is supported by private equity firm Warburg Pincus.
JD.com investment in ESR ‘is expected to not only deepen the strategic cooperation and synergies between the two companies, but also create an alliance that enables best-in-class logistics services for customers and businesses in China and beyond’.
ESR was set up following a merger between e-Shang Cayman, a Shanghai-based warehousing services firm, and Redwood Group, a Singaporean logistics real estate investment firm.
It has $12bn worth of assets under management. The firm plans to team up with JD.com on property development, fund management and investment.
ESR operates over 10 million m2 of warehouse space across China, India, Japan and South Korea, with a presence in Australia and Singapore.
In February, JD.com raised $2.5bn for its logistics unit to boost its position in both domestic and overseas online markets. It also has a partnership with Yamato Holdings, a Japanese delivery company.
A subsidiary of JD.com, JD Logistics CEO Zhenhui said: “This investment in ESR will further strengthen our relationship to solidify and expand our logistics networks. We look forward to working closely, and together we will continue to expand the ecosystem to bring values to our customers and business partners.”
ESR co-chief executives Jeffrey Shen and Stuart Gibson said: “We are very excited to have JD.com become a long-term shareholder of the company. This move demonstrates JD’s vote of confidence in our team, vision and growth strategies. Leveraging JD’s network and smart supply chain capabilities, together with ESR’s exceptional penetration in both developed and emerging markets across Asia-Pacific, this strategic alliance is poised to capitalise on megatrends in the region.”
China’s online retail market is facing stiff competition and oversaturated, compelling the firms to acquire logistics facilities and new ventures to draw new revenue sources.
According to government figures, online retail sales in China touched $307bn in the first quarter of this year, which is around 25% of the total retail sales.