Bain Capital, DNE Group Form $250M China Industrial JV

Bain Capital and Warburg Pincus-backed DNE Group have set up a $250 million joint venture to develop and operate manufacturing parks across mainland China’s primary economic hubs, according to a joint announcement on Tuesday.

The US private equity firm is investing in a seed portfolio of sites and ongoing development projects assembled by DNE Group in the Yangtze River Delta region around Shanghai, with the goal of building modern manufacturing parks. DNE will also act as project manager for development of the seed portfolio.

Bain’s commitment comes after the company in 2019 invested $300 million in D&J China. Two years ago D&J merged with China New Ease to form DNE Group, with both of the Chinese real estate firms having been founded by entrepreneur Sun Dongping together with Warburg Pincus.

“The establishment of this joint venture platform signifies a new chapter in the partnership we have developed with DNE since five years ago,” Kei Chua, partner at Bain Capital, said in the statement. “We look forward to leveraging each other’s strengths and resources to meet the growing demand of advanced manufacturing and life sciences companies for a new generation of high-quality, high-value industrial parks.”

Trust in the New Economy

Bain said its latest venture reflects its confidence in the potential of China’s new economy sector. Beyond the Yangtze River Delta, the Boston-based investment firm said it sees potential in advanced manufacturing hubs in the Beijing-Tianjin-Hebei region, and the Guangdong-Hong Kong-Macau Greater Bay Area.

The two companies said they expect the portfolio, once completed, will benefit from synergies with other industrial parks operated by DNE. The companies, however, did not disclose details of the assets in the seed portfolio.

“We will continue to serve as a bridge between international institutional investors and the Chinese market, expand our capabilities in the development and operation of modern manufacturing infrastructure, and support the vigorous growth of China’s new economy,” said DNE chairman and chief executive officer Sun Dongping.

Sun, who also co-founded e-Shang – a predecessor of what is now industrial property giant ESR – described Bain’s expansion of the joint venture as “a remarkable endorsement” of DNE’s capabilities as an investor, developer and operator in China with the company now having grown its portfolio to 14 million square metres (150 million square feet).

Capital Raising Continues

Including the latest partnership with Bain, the $16-billion industrial specialist has now raised a total of $3.6 billion so far this year through joint ventures and fundraising.

In April DNE announced its largest deal of 2023 when it unveiled a RMB 14 billion ($2 billion) joint venture with an unnamed global institution to develop and operate industrial and logistics properties across China’s key economic hubs with that shed venture coming after DNE set up a RMB 6 billion onshore industrial fund in March.

Also in the first quarter DNE set up a RMB 3.5 billion life science fund on behalf of insurer AIA in the first quarter to invest in a four-building R&D complex in Shanghai’s Pudong district.

In October last year, DNE raised more than RMB 1.5 billion from the initial public offering (IPO) of D&J New Economy Industrial Park REIT, now called DNE REIT, on the Shanghai stock exchange.