It is a busy time for Logicor’s warehouses. This low-profile property group owns and manages 170 distribution centres around the UK for Amazon, Marks & Spencer, PrettyLittleThing, DHL and numerous other well-known businesses. After the stampede of Christmas deliveries follows a rush of returns. Logicor’s cavernous “sheds” are teeming with unwanted presents heading back to retailers. But Logicor also deals with a rather different type of return — the hundreds of millions of pounds it hands over to the Chinese state.
For the past five years it has been 60 per cent owned by China Investment Corporation (CIC), Beijing’s sovereign wealth fund. As a result, every time it pays a dividend to investors, tens of millions of pounds flows to Xi Jinping’s authoritarian regime, which wholly owns CIC.
Logicor is one of several large British companies that have together paid out more than £1 billion to CIC over the past five years. Analysis by The Sunday Times today reveals more than 100 big British companies, including Logicor, count the Chinese state as a shareholder.
These investments range from utility companies and other critical national infrastructure to innovative tech firms developing facial recognition technology, robotics and artificial intelligence. Our research investigated the shareholder registers of hundreds of UK public and private companies. We also looked at the ownership of dozens of properties.
In 2021, The Sunday Times compiled the China List, a detailed analysis of more than 200 British assets snapped up by Chinese and Hong Kong-based government agencies, companies and investors, worth more than £135 billion. The updated list, published today, puts the UK assets held by the Chinese state at £45 billion and the total held overall by Chinese and Hong Kong investors at £152 billion.
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At the G20 summit in November, Rishi Sunak called China the “biggest state-based threat” to Britain’s economic security. “That is how I think about China,” he said. “That is why I said over the summer that it’s important that we take the powers that we need to defend ourselves.”
The prime minister was alluding to the National Security and Investment Act, a law effective from last January that has been used to block British companies striking deals with Chinese and Hong Kong-based companies on security grounds.
Although the Commons foreign affairs select committee recently urged the government to classify China as a “threat” to national interests, Sunak is trying to pursue a policy of “robust pragmatism” towards Beijing because the UK “simply cannot ignore China’s significance in world affairs”. Disquiet has been growing at the size and scope of investment by the Chinese government agencies and private investors for some years, but this has become stronger over national security fears. Bob Seely, a Tory member of the committee, said: “The Chinese Communist Party uses economic power for political leverage. China’s policy is to increase western dependency on it, whilst Beijing seeks to become more self-sufficient. We need to engage with China, but we need to be less naïve and more realistic about how we do so. We need to be much more mindful of protecting our interests.”
Alicia Kearns, the Tory MP who chairs the committee, said: “It’s no surprise that China is focused on buying up gas, water, and airports alongside core technologies of the future. We are sleepwalking into the Chinese Communist Party’s dependence trap by failing to adequately protect core industries and national infrastructure. Resilience must be a core ambition of this government, and that starts with a comprehensive audit so we can begin to tackle dependency chokepoints.”
Huge dividends from oil and gas companies
Founded just over a decade ago, Logicor has quickly and quietly become a vital cog in the UK economy. The firm’s presence is everywhere. Amazon leases Logicor buildings near Bristol, the Surrey town of Weybridge and Bardon in Leicestershire. The warehouse giant, which has a head office in London, also has premises in cities including Birmingham, Manchester, Nottingham and Sheffield.
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Last February, Logicor paid out €300 million (£260.7 million) in dividends to its shareholders. CIC has banked about £222 million from these payments since taking control of the business. Logicor said it is not simply a British company, adding that around 436 of its premises are located outside the UK and it has a second headquarters in Luxembourg.
Other British businesses that have together paid huge dividends to CIC over the past five years include the oil and gas company Neptune Energy. China’s sovereign wealth fund owns 49 per cent of Neptune, which supplies about 1.5 million homes from Cygnus, the UK’s largest gas field, which is in the North Sea about 100 miles off the Lincolnshire coast.
Neptune, based in Aberdeen, paid out $544.7 million (£446.1 million) of dividends in 2021. In total since 2019, CIC has received £294 million for its stake in Neptune. CIC has an 8.7 per cent stake in Heathrow airport, though it did not declare any dividends in 2021 due to Covid disruption. Nevertheless, China’s share of dividends from the UK’s busiest airport come in at almost £163 million between 2017 and 2020.
Two further stakes in UK utility firms acquired by Beijing’s sovereign wealth fund — 8.7 per cent of Thames Water and 10.5 per cent of Britain’s biggest gas network, Cadent Gas — together brought in a shade under £140 million. Taking account of dividends paid out by Shell, BP and other stock market-listed firms, it easily takes the payments back to the Chinese state above £1 billion over the past five years.
From the Premier League to the pub
No laws have been broken with these payments — they are a part of doing business. Companies routinely pay dividends as a way for those who have put money into a firm to take a profit. Many of these assets were bought by private individuals, but also by the Chinese state through its sovereign wealth fund and central bank.
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These investments ranged from stakes in vital energy utilities and transport infrastructure to landmark London tower blocks, pub chains, football clubs and private schools. The rise since the original research is partially explained by the undiminished appetite of Asian investors for UK companies and property. A depressed pound continues to make British assets look cheap.
However, many of the acquisitions made by Chinese investors have increased in value. UK Power Networks, Northumbrian Water and Northern Gas Networks — a trio of infrastructure businesses all owned by the Hong Kong investor Li Ka-shing — are all worth more than they were 18 months ago.
We have also found evidence of acquisitions where until now the ownership has been unclear.
Assets with stakes held by China or Chinese investors include:
• Hinkley Point C nuclear power plant, a third of which is owned by the Chinese government.
• The City of London tower block known as the Cheesegrater, which generates annual rent of almost £40 million for the Chinese-born billionaire Cheung Chung-kiu.
• Fixtures of British high streets, including Superdrug, Clarks Shoes and The Perfume Shop.
• A small stake in the sandwich maker Greggs.
• Hong Kong-owned Greene King. The pub and brewing group has snapped up dozens more British hostelries in the past 18 months.
• The car manufacturer Aston Martin, now 8 per cent owned by Geely Auto Group.
• Gabbitas Education, provider of tutoring services to members of the royal family, as well as the cast of the Harry Potter films.
The research includes a wide range of UK assets owned by the Chinese state, as well as private investors based in mainland China and Hong Kong, many of whom may not support Xi’s regime.
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Nevertheless, all private companies in China have a legal duty to follow the state’s instructions when required and the “one country, two systems” principle which ensured greater independence for Hong Kong has steadily ebbed away.
Downing Street has become increasingly concerned that private Chinese companies with UK investments could become agents of Xi’s regime if relations between the two countries further deteriorated. Those fears recently prompted the British government to insist Huawei technology is removed from the UK’s 5G telecoms network by 2027.
Some assets have changed hands in the past 18 months. In early 2022 the billionaire Li Ka-shing sold 5 Broadgate in the City of London for £1.2 billion — about £200 million more than he paid for it just four years before. China Vanke, a partly state-owned property outfit, earlier this year sold Ryder Court for £132 million, £16 million more than it had paid for the five-floor Mayfair block in 2016.
Paul Suen Cho-hung, a Chinese-born businessman, sold Birmingham City last January for £35 million, and Gao Jisheng sold his majority stake in Premier League Southampton. Manchester City, Wolverhampton Wanderers, West Bromwich Albion, Reading and Barnsley are among the football clubs that still feature in this year’s research because they remain either owned or part-owned by Chinese or Hong Kong investors.
Not all of the investments prove lucrative. In 2017 Jining-based textiles group Shandong Ruyi invested £95 million in Aquascutum and three years later the British fashion label sank into administration.
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Of 209 investments that appear on the China List, 54 are in the technology sector. However, the details of many of these deals have not been made public and so it is impossible to put a value on holdings.
The energy investments have a combined value of nearly £21.2 billion — more than any other sector. The three water company holdings that appear — Affinity Water, Northumbrian Water and Thames Water — are together worth more than £6.1 billion.
There are also 44 property assets on the list with a combined value of almost £10 billion, with stakes in sites outside London, including Leicester’s Fosse Shopping Park, York’s Monks Cross Shopping Park and the Manchester block which serves as the headquarters of the Co-operative Group.
A golden era or a murky mess?
It is seven years since David Cameron, then prime minister, heralded a “golden era” for Sino-British relations that would pay dividends for Britain, rather than China.
Speaking before Xi’s state visit to the UK in October 2015, Cameron played up “the investment in our infrastructure” and those “Chinese companies employing people and creating jobs”.
Xi said that the strong relationship with the UK was a “big win for China”, but added that this was due to “access to a country that is a leading member of the EU and has so many other contacts and roles in the world”.
Nine months later Britain voted to leave the single market and the pound sank against global currencies, making companies based here an even more attractive investment proposition.
Since Xi’s visit relations between Britain and China have soured.
In December, John Healey, Labour’s shadow defence secretary accused the government of being “complacent” over the risks posed by China. Healey was commenting on an MoD contract awarded to Pinnacle, a housing contractor responsible for the accommodation of 39,000 service families. The Chinese businessman Terrence Tsang is Pinnacle’s largest shareholder.
“Any risk that the personal details of our forces have been compromised is extremely serious,” Healey said.
Tensions have grown over the suppression of the pro-democracy protests in Hong Kong. In December China removed six of its officials from the UK after violence at its consulate in Manchester.
Senior Tories have criticised so-called “Chinese police stations” established in Croydon and Hendon in London and Glasgow, allegedly intended to track down Chinese dissidents. One of the buildings is registered as a Chinese restaurant, another as an estate agency. China’s government has said the offices exist to provide support to Chinese nationals and are staffed by officials — not police officers. In November, the security minister Tom Tugendhat said such activities “must be stopped”, saying it would be “unacceptable” for any foreign government to attempt to operate a security apparatus in Britain.
Last January, the National Security and Investment Act came into force and has already been used to block British businesses from striking deals with Chinese and Hong Kong-based companies on security grounds.
The same law is being used by ministers to retrospectively reverse the 2021 acquisition of Britain’s biggest microchip factory, Newport Wafer Fab, by Nexperia, which is a subsidiary of Shanghai-listed Wingtech.
Sir Iain Duncan Smith, the Conservative former leader, said it was time to start forcing Chinese owners out, in the same way that Beijing is being removed from parts of Britain’s nuclear industry.
“This is a murky mess that successive British governments have plunged us into, showing our terrible level of dependency on China,” he said.
“The scale of assets that are now owned in almost every single area of interest in China is breathtaking.
“The whole policy of the golden decade has left us very vulnerable now. We are more vulnerable than ever to a state which is clearly so antithetic to almost everything that we believe in, but we are now utterly economically dependent on this country and too often it means that our policy shifts so that we don’t upset the country that could switch off so much of what we do.”
Professor Steve Tsang, director of the SOAS China Institute in London, said: “If they are state or state-backed enterprises, they are obviously very much under the control of the [Chinese Communist] Party. Even other private companies they cannot always escape the control of the party either.”
Tsang detects a hardening in Westminster towards to Beijing. “Up to now, the UK is arguably one of the most open of the major western economies, least rejecting of outside investors simply because of the politics or because they’re foreign,” he added. “You always have a more restrictive approach in the US, for example.
“What we have now is a government that is finally striking a balance, that it recognises that China does pose serious problems for us that we need to do something about. It recognises that it hasn’t got a proper strategy without admitting it in public, but probably is trying to work something out that would find the right balance.”
Ron Black, the former boss of microchip designer Imagination Technologies, quit over an attempted boardroom coup by its owner’s Chinese backers. It had been listed on the stock market before being sold to Chinese investors, despite concerns that this would see the UK lose valuable intellectual property.
Black says that China has extensive focus on electronics for vehicle electrification, radio frequency for 5G and beyond, and microprocessors for AI, which is why companies such as Newport Wafer Fab and Imagination Technologies are so important.
He added; “The risk to the UK is that these acquisitions are not about technology access and supply, but technology transfer.”
Stakes in dozens of FTSE 100 firms
CIC is not the only part of Xi’s administration earning well from buying British assets.
The People’s Bank of China, the nation’s central bank, has stakes in dozens of FTSE 100 companies, many of which also pay vast dividends.
Analysis of shareholder registers by data provider Argus Vickers shows that China’s central bank owns a stake in Shell worth more than £2.5 billion. This holding should have delivered nearly £78 million in dividends over the past year alone.
The People’s Bank has a stake worth nearly £1.4 billion in BP, which should have delivered more than £53 million of dividends over the past year, a £100 million holding in British American Tobacco and a £600m stake in the mining giant Rio Tinto. The National Council for Social Security Fund, another Beijing government agency, owns stakes in British Land, BT, the pharmaceuticals firm GSK and the housebuilders Barratt Homes and Persimmon.
CIC also has shares in UK-listed companies through its offshoots, Best Invest Corporation and Flourish.
These two entities have stakes in AstraZeneca, Aviva, Barclays, Lloyds Banking Group and dozens of other British firms.
Despite the extensive investigation, the true extent of British assets owned by Chinese and Hong Kong-based investors is almost certainly much higher than reported here because it is not always possible to identify the true ownership of many companies and properties in the UK — especially when they are owned by offshore companies.
George Magnus, a research associate at Oxford University’s China Centre, highlighted the deals involving Chinese tech companies as China shifts its “emphasis from economic growth to economic control”.
Magnus said: “One [of China’s goals] is to try to acquire technology they need and want to develop so that they can realise their ambitions in science and technology. So if they don’t have the technology, they need to get it from foreign companies. The second is to build up national champions so that they don’t have to rely on foreigners as much in the future. And the third is to leverage both of those two factors into soft power in the global south. Are they still interested in British industry and British technology? The answer is absolutely yes.”
There is certainly no end in sight for Logicor’s growth. The warehouse group’s latest financial statements reference a land bank stocked with sites it hopes to develop in the future.
Shortly before Christmas, Marks & Spencer moved into a new distribution centre near Daventry, Northamptonshire, after signing another lease with Logicor.
The facility will simultaneously help one of Britain’s best known retailers distribute cold food — and prove another handsome return for the Chinese state.
