Warburg Pincus in Industrial Real Estate JV with Vietnam’s BECAMEX

Jeff Perlman Warburg Pincus

Vietnam’s logistics and industrial property market is poised for “outsized growth,” says Jeff Perlman of Warburg Pincus

Global private equity firm Warburg Pincus is teaming up with Vietnamese state-owned builder Becamex IDC Corp to create the largest logistics and industrial real estate developer in the country, with an investment of over $200 million.

The new venture, BW Industrial Development Joint Stock Company (BWID), will focus on developing institutional-grade logistics and industrial properties across Vietnam.

While the companies did not specify what each party will contribute to the joint venture, the partners stated that the venture has a management team, significant land holdings and pipeline projects in place, and will concentrate on industrial facilities in the Southeast Asian country’s key economic and industrial zones.

The plan calls for BWID to invest in modern logistics warehouses, ready-built and build-to-suit factories among other assets, according to a statement by Warburg Pincus. The New York-based firm is a major player in Asia’s industrial property sector, having co-founded regional warehouse developer e-Shang Redwood (ESR) in 2011.

PE Giant Sees Thirst for Industrial Property in Vietnam

My Phuoc 3 Binh Duong Vietnam

My Phuoc 3 industrial park in Binh Duong, Vietnam is among the assets to be seeded into the BWID venture

Through the deal, Warburg Pincus hopes to capitalise on growing demand for warehouses and manufacturing space in the country of 96 million people, which reported GDP growth of 6.8 percent last year. Vietnam’s manufacturing and processing sector accounted for over 40 percent of the country’s foreign direct investment last year, which surged to a record high of $36 billion overall.

“With the transformative shift of the manufacturing base from markets like China to Vietnam as well as with the rapid rise of domestic consumption, the logistics and industrial real estate market in Vietnam is in the ‘early innings’ and at an inflection point for outsized growth,” commented Jeffrey Perlman, Managing Director and Head of Southeast Asia of Warburg Pincus in a statement.

“We are excited to partner with Becamex to leverage their unrivaled local sector knowledge and experience to build the leading platform in Vietnam,” he added.

Vietnamese Developer Finds Another Global Partner

Formed in 1976, Becamex is a leading developer of large-scale industrial townships in Vietnam, with an extensive land bank and a portfolio of over 10 industrial parks. The company has a history of international partnerships including a tie-up with Tokyo-based infrastructure builder Tokyu Corporation and Singaporean industrial group Sembcorp.

Becamex and Sembcorp partnered to form the Vietnam Singapore Industrial Park (VSIP) platform in 1996, which has chalked up over $10 billion of investments to date. Sembcorp is sponsored by Singaporean sovereign wealth fund Temasek.

“We believe that the recent government policies (including significant trade deals) and a strong focus on infrastructure have transformed Vietnam into one of the world’s most attractive investment destinations which in turn will continue to create outsized demand for modern institutional-grade industrial and logistics properties and services,” commented Becamex chairman Nguyen Van Hung.

Warburg Pincus Builds on Vietnam Track Record

Warburg Pincus has committed over $1 billion to opportunities in Southeast Asia since 2013, when it led a consortium that invested $200 million to Vincom, the shopping centre development arm of Hanoi-based Vingroup. The private equity firm followed that up by leading a $100 million investment round in the developer in 2015.

Vincom went public on the Ho Chi Minh Stock Exchange last November, raising the equivalent of $740 million in the country’s largest-ever IPO. Warburg Pincus also linked up with Vietnam’s VinaCapital to invest up to $300 million in hotel venture Lodgis Hospitality in November 2016.

The US firm is also a longstanding enthusiast for Asia’s logistics sector, backing Shanghai-based e-Shang which merged with Singapore’s Redwood Group to form industrial development heavyweight ESR in 2016. Warburg Pincus is also a backer of Shanghai-based business park operator D&J China.

The company has over $44 billion in assets under management globally, and has raised 16 private equity funds which have invested over $60 billion in more than 800 companies in total.