Logos, Sime Darby Reach First Closing of $250M Malaysia Development Fund

Logos, Sime Darby Reach First Closing of $250M Malaysia Development Fund

The fund is supporting development of E-Metro Logistics Park in Klang

A joint venture of Logos and Sime Darby Property has achieved a first closing of its investment vehicle targeting development of logistics assets in Malaysia after securing 70 percent in capital commitments for a fund size of up to $250 million.

The 51:49 JV of Sime Darby Property, a unit of the Kuala Lumpur-based conglomerate, and Sydney-based industrial specialist Logos has signed up as co-investors two of Malaysia’s biggest financial institutions — state-backed fund manager PNB and pension fund KWAP — to anchor the inaugural Industrial Development Fund, the partners said last Friday in a release.

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The Shariah-compliant fund will support the development of sustainable, large-scale logistics projects with green building certification over the next three years, including 8 million square feet (743,224 square metres) of gross lettable area at the already-announced E-Metro Logistics Park in Klang. The immediate capital available to the fund for deployment is $114 million.

“The first closing of the Industrial Development Fund is testament to the underlying fundamentals of the Malaysian economy and the demand for modern logistics facilities in this market,” said David Aboud, Logos head of Malaysia.

Maiden Project Underway

Logos, a subsidiary of Hong Kong-listed ESR Group, and Sime Darby Property first announced their JV last September after setting aside a 177 acre (71.6 hectare) development site within Sime Darby’s Bandar Bukit Raja township in Klang, home to Malaysia’s busiest container port and many industrial parks.

Sime Darby Property managing director, Dato’ Azmir Merican

Sime Darby Property managing director Azmir Merican

Work has begun at the site on the first two phases of E-Metro Logistics Park, which will feature a respective 800,000 and 1.2 million square feet of gross lettable area across ready-built and built-to-specification facilities. The first phase is expected to be completed for identified tenants in June 2023.

Azmir Merican, Sime Darby Property’s group managing director, said the fund is capitalising on high demand for e-commerce and cold chain storage.

“We are confident that the overall interest in logistics as an asset class will increase,” he said. “The E-Metro Logistics Park is strategically located and connected to highways, seaports and airports, making it an ideal location for regional supply chain hubs.”

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S&P Global Ratings on Monday upgraded its long-term sovereign credit ratings on Malaysia from negative to stable, contending that the Southeast Asian nation is mounting a strong economic recovery from the pandemic-driven slowdown and is well positioned to gain from rising commodity prices.

Fertile Ground

The tie-up with Sime Darby is the second big initiative in Malaysia in the last few years for Logos, which in January 2021 launched a joint venture with local partner Global Vision to develop a $371 million logistics complex in the Klang Valley.

The site for the project is a 71 acre piece of land in Section 16 of the Shah Alam area of Selangor state, sitting close to the Federal Highway connecting Kuala Lumpur with Port Klang.

Big things are happening in the country’s digital infrastructure space as well, with China’s GDS Holdings hooking up with Bursa Malaysia-listed YTL Power International in April of this year to co-develop 168 megawatts of data centre capacity across eight individual facilities at a campus in Malaysia’s Johor state.

The first phase of the co-development will enter service in 2024 at the YTL Green Data Center Park about 30 kilometres (18.6 miles) from the cities of Johor Bahru and Singapore.

YTL Power’s digital infrastructure arm, Singapore-headquartered YTL Data Center Holdings, is developing 500MW of capacity at the solar-powered campus in the Iskandar region surrounding Johor Bahru — the southernmost city in Malaysia — to supply rack space to operators in the country and across the border in the Lion City.

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