ESR raises $1.6b in up-sized HK IPO, gains on debut
Pan-Asian logistics and fund management platform ESR gained 5.4% on its first day of trading in Hong Kong after completing Asia's second-largest IPO of the year.
The company postponed the offering in June due to unrest in Hong Kong, but relaunched it last month following strong demand from investors. “They really want to see this as a public company,” Jeffrey Perlman, ESR's chairman and a managing director at Warburg Pincus, told AVCJ.
The company raised HK$12.6 billion ($1.6 billion) by selling 751.7 million shares for HK$16.80 apiece, according to a filing. While the pricing was at the mid-point of the indicative range, ESR increased the number of shares in the offering after it was two times oversubscribed. The original plan was to sell 653.7 million shares. Only the Budweiser Asia IPO, at $5.8 billion, is larger in 2019.
ESR's stock closed at HK$17.70 on November 1. As of late morning trading on November 4, it was down 4% at HK$17.00.
Warburg Pincus seeded the company - originally known as e-Shang - in 2011 and built up its China footprint before merging with pan-Asian player 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.
Warburg Pincus sold 389.1 million shares in the offering, receiving proceeds of HK$6.5 billion and retaining 21.21% stake in the business. There were also smaller partial exits for the likes of Goldman Sachs, APG Asset Management, the General Electric Pension Trust and JD.com’s logistics unit.
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