Warburg Pincus-backed ESR Plans REIT IPO Of South Korean Assets To Raise $321m

Hong Kong-based logistics real estate developer ESR plans to launch an initial public offering (IPO) of ESR Kendall Square REIT, a real estate investment trust (REIT) comprising South Korean assets, according to a recent filing.

The company is looking to raise approximately 357.3 billion won ($320.9 million) from the IPO, which is expected by end-December this year.

ESR Kendall Square, a subsidiary of ESR, acts as a sponsor of ESR Kendall Square REIT in relation to the proposed listing on the KRX KOSPI Market of the Korea Exchange.

The issuer expects to float shares on South Korea’s bourse at a market capitalisation of 716 billion won ($642.7 million), ESR disclosed in the filing with the Hong Kong stock exchange on November 6.

The REIT plans to use the proceeds from the IPO to acquire 10 modern, institutional-grade logistics facilities located in Greater Seoul and Greater Busan regions, and the remaining property of Anseong Logistics Park.

ESR Kendall Square REIT will run its institutional investor roadshow between November 23 and December 2, 2020. The IPO pricing will be determined on December 3.

ESR was formed in 2016 through the merger of the Japan-centric Redwood Group and China-focused e-Shang, which was co-founded by Warburg Pincus in 2011.

With businesses covering investment, fund management, and property development, the firm has recorded $26.5 billion in total assets under management (AUM) and 18.7 million square metres GFA in operation and under development as of June 30, 2020.

Its portfolio spans the Asia-Pacific region, covering countries including China, Japan, South Korea, Singapore, Australia, and India, according to its website.

ESR’s 2020 interim report shows that South Korea is the second-largest market for ESR in terms of AUM, with about $7.2 billion as of June 30, 2020, after Japan ($8 billion). The firm booked revenue of $198 million in H1 2020, up 26.9 per cent from $156 million in the same period in 2019.

The firm raised HK$14.1 billion ($1.8 billion) in a re-launched IPO in November 2019 after shelving its first attempt last June, citing unfavourable market conditions.