PE-backed logistics platform ESR files for Hong Kong IPO

The size and pricing of the offering have not yet been set, but Reuters reported that the company was looking to raise at least $1 billion. Warburg Pincus is the largest individual shareholder with 38.35%, according to a prospectus. The founders of Redwood – a Singapore warehousing operator that merged with China-based e-Shang to form ESR in 2016 – have 13.33%. Jeffrey Shen, who established e-Shang in 2011 with Dongping Sun and Warburg Pincus, has 6.5%.

ESR has received multiple rounds of private funding and both e-Shang and Redwood received PE support before that. APG Asset Management paid $650 million for a 20% stake in e-Shang in 2014 and now holds 7.5%. Korea's SK Group owns 11.51%, having invested $334 million in 2017, while Chinese e-commerce group JD.com committed $306 million a year later and has 8.23%.

Other investors that appear in the prospectus include members of a Chinese consortium – China Huarong Asset Management, Shanghai Pudong Development Bank, China Everbright, and CMBC International – that participated in a $300 million pre-IPO round in early 2017. StepStone Global and the General Electric Pension Trust, which together put in $140 million in late 2017, and Goldman Sachs are also mentioned.

ESR claims to be the largest Asia Pacific-focused real estate logistics platform by gross floor area (GFA) and asset value. As of September 2018, it had 5.7 million square meters of completed properties, as well as 3.4 million sqm under construction and 1.9 million sqm of land held for future development. Most of its facilities are sited in top-tier cities.

The company specializes in modern logistics facilities that cater to e-commerce companies, third-party logistics providers, retailers, manufacturers, and cold-chain logistics providers. The need for supply chain modernization on the back of increasing online shopping activity has ramped up PE interest in the sector throughout developing Asia, with logistical gaps in China as well as Southeast Asia and India.

By GFA, China accounts for 56% of the completed properties, 41% of the facilities under construction, and 48% of the land for future development. Japan, South Korea, and Singapore are ESR's other major markets. ESR also has a sizeable undeveloped landbank in India through a joint venture with Allianz announced towards the end of last year.

Total assets under management were $14.1 billion as of last September, with 28% in China, 35% in Japan and 27% in Korea. This comprised $1.78 billion on the balance sheet and $12.3 billion held across 18 funds and one Singapore-listed real estate investment trust (REIT) with a carrying value of $1.2 billion. The funds had $4.8 billion in equity commitments.

Revenue came to $153.3 million in 2017 – 61.5% in fee income from the fund management business – up from $96.7 million a year earlier. Over the same period, net profit rose from $105 million to $201.2 million. Net debt stood at $1.46 billion in September, which translates into a gearing ratio of 14.8%.

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• Topics
• Greater China
• North Asia
• South Asia
• Real estate
• IPO
• Infrastructure
• Asia
• Logistics
• Exit
• Warburg Pincus Asia
• APG