Chinese sovereign wealth fund China Investment Corporation (CIC) is poised to buy Blackstone’s European logistics business Logicor for more than €12 billion (US$13.4 billion). If completed, it will be the largest ever European real estate deal in terms of value.
CIC is out-competing rivals including Mapletree Investments, Temasek Holdings and Global Logistic Properties to win the bid to acquire the Blackstone business unit with 13.6 million square meters of warehouse assets, according to media reports citing insiders.
A deal is likely to be signed in the in the next few days, but could still fall apart due to the complexity of the transaction, according to the reports. Logicor is funded by numerous Blackstone funds across 17 jurisdictions, creating enormous tax and regulatory issues.
Blackstone established Logicor five years ago and has built it into the second largest owner of logistics properties in Europe.
CIC has a special relationship with Blackstone, as the Chinese sovereign wealth fund is one of the U.S. private equity giant's key shareholders and a buyer of Blackstone's portfolio companies. In 2007, CIC invested roughly US$3 billion in Blackstone just before the company completed an initial public offering in June 2007 at US$31 per share. Blackstone's shares closed at US$32.86 in New York yesterday.
CIC is also a buyer of many of Blackstone's portfolio companies. In 2014, CIC completed an acquisition of Chiswick Park in west London from Blackstone for around £780 million (US$1 billion). CIC is also among the early parties seeking to buy Blackstone's portfolio of Australian shopping centers for A$3.5 billion, according to local media reports.
In 2015, CIC reported a dollar-denominated net return of negative 2.96% on its overseas investments, due to volatility in international financial markets and foreign exchange losses triggered by an appreciating U.S. dollar, its 2016 annual reported disclosed.
The negative return reduced CIC's average annualized investment return to 4.58% since inception in 2007 through the end of last year.