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  • Greater China

PE-backed ESR relaunches Hong Kong IPO

  • Tim Burroughs
  • 22 October 2019
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Pan-Asian logistics and fund management platform ESR has relaunched a Hong Kong IPO that was pulled in June amidst unrest in Hong Kong and concerns about the valuation.

The company’s revised offering has the same pricing terms as the earlier one – a range of HK$16.20-17.40 per share, according to a statement – but it plans to sell 653.7 million shares, up from 560.7 million. Should the shares price at the top end of the range, ESR would raise HK$11.4 billion ($1.45 billion), according to a filing. This doesn’t include offer size adjustment and over-allotment options.

Ontario Municipal Employees Retirement System (OMERS) will participate as a cornerstone investor, paying up to HK$4.76 billion for a 9% stake in ESR.

The offering includes 373.5 million shares held by existing investors. Warburg Pincus plans to sell 300.5 million shares, which would see its stake fall from 37.48% to 24.13%. There will be smaller partial exits for the likes of Goldman Sachs, APG Asset Management, the General Electric Pension Trust and JD.com’s logistics unit.

Warburg Pincus established China-based e-Shang in 2011 with Jeffery Shen and Dongping Sun. It merged with Singapore warehousing operator Redwood in 2016 to form ESR. The company claims to be the largest Asia Pacific-focused real estate logistics platform by gross floor area (GFA) and asset value. It specializes in modern logistics facilities that cater to e-commerce companies, third-party logistics providers, retailers, manufacturers, and cold-chain logistics providers.

As of June 2019, ESR had 8.5 million square meters of completed properties, as well as 4.4 million sqm under construction and 2.4 million sqm of land held for future development. The company’s largest market is China, with Japan, South Korea, and Singapore of meaningful size. There is also a large undeveloped landbank in India through a joint venture with Allianz.

Total assets under management were $20.2 billion – within $3 billion of Asia Pacific market leaders Goodman and GLP – of which $2.7 billion was on the balance sheet. ESR also had 30 private third-party pooled investment vehicles, with $6.3 billion in equity commitments, and two Singapore-listed real estate investment trusts, with a carrying value of $2.9 billion.

Revenue came to $251.1 million in 2018 – fee income from the fund management business was responsible for over half of this – up from $153.3 million a year earlier. Over the same period, net profit rose from 200.8 million to $212.9 million.

ESR has received multiple rounds of private funding, and both e-Shang and Redwood received PE support before that. Other investors listed in the prospectus include Korea’s SK Group, China Huarong Asset Management, Shanghai Pudong Development Bank, China Everbright, CMBC International, and StepStone Global.

"Our asset light business model in a traditionally heavy asset sector, coupled with our best-in-class management team in each market and synergistic network of blue-chip partners across the region, enables us to build a highly scalable business and achieve strong growth and returns," Shen and Stuart Gibson, his co-CEO, said in a statement. "We are pleased that our cornerstone investor recognizes our unique and differentiated business model."

Pricing and allotment results will be announced on October 31 and ESR is scheduled to begin trading the following day.

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  • IPO
  • North Asia
  • South Asia
  • Real estate
  • Infrastructure
  • Logistics
  • Asia
  • Warburg Pincus Asia
  • APG
  • Goldman Sachs

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