Carlyle Group Leading Investment in China's Shanghai ANE Logistics

By Rick Carew

HONG KONG--Carlyle Group LP is leading an investment in a Chinese logistics company, betting on demand for delivery services to support China's fast-growing e-commerce industry.

The U.S. private-equity firm is being joined by Goldman Sachs Group Inc. and China Renaissance in putting money into Shanghai ANE Logistics Ltd., which delivers small orders nationwide through a network of 5,000 franchised stores. Carlyle Group's portion of the investment is $120 million.

Logistics businesses tend to require large amounts of capital and a franchised model can limit the amount of funds tied up in the operation.

"China's economic restructuring and e-commerce development bring about significant growth and consolidation opportunities in the country's [less-than-truckload] logistics industry," said Carlyle Group Managing Director Eric Zhang.

Private-equity firms have poured money into logistics companies and warehousing in China as online retailers such as Alibaba Group Holding Ltd. and JD.com Inc. experience rapid growth. For example, earlier this month RRJ Capital invested an additional $250 million into Shanghai-based China Logistics Property Holding Co.

Unlike in the U.S. market, where Wal-Mart Stores Inc. and Costco Wholesale Corp. operate efficient logistics systems, China's traditional retailers don't have such strong delivery networks. That has created an opportunity for Chinese e-commerce companies to grow more rapidly with weaker incumbents.

In April, Carlyle Group hired former Wal-Mart Chief Executive Mike Duke, who oversaw a dramatic expansion in the retailer's overseas operations, as an operating executive to consult with the private-equity firm's portfolio companies and advise on its investments.

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