Warburg Pincus-backed ESR To Raise Up To $1.24b In HKs Biggest IPO In 2019

Warburg Pincus-backed logistics real estate developer ESR Cayman Limited is looking to raise as much as $1.16 billion in what would be the biggest Hong Kong initial public offering for 2019.

In a statement on Wednesday, ESR said it is floating 560.7 million shares for a global offering, of which 94.4 per cent will be for international placement while the remaining will be for the Hong Kong public offer.

The indicative offer price range is between HK$16.20 and HK$17.4 per share. Assuming the offer price is HK$16.80 per share, ESR estimated that it could raise about HK$9.12 billion ($1.16 billion) before any greenshoe or over-allocation option is included.

The IPO will give the firm a market capitalisation of between HK$49.3 billion ($6.29 billion) and HK$52.9 billion ($6.75 billion). The public offer will begin on June 6, 2019 and ends at 12 noon on June 12. Trading of shares will commence on June 20.

Besides Warburg Pincus, ESR also counts APG, SK Holdings, JD.com, CLSA, Goldman Sachs, CPPIB, Ping An and Allianz Real Estate as its investors. Chinese online retailer JD.com Inc invested $306 million in ESR in April last year through its logistics unit.

Some of these existing shareholders will be selling their shares in the IPO including Warburg Pincus. A Reuters report said that the US-based private equity major is looking to trim its holdings from the current 38.35 per cent to about 28 per cent.

The real estate firm was said to be delaying its IPO due to market volatility caused by escalating trade tensions. To that, ESR commented that there was no delay and that  “everything was done through the normal process”.

The lack of huge listings in the city-state has seen Hong Kong playing catch up in the worldwide IPO rankings, as it was overtaken by Nasdaq and NYSE in the first half of 2019, according to data provider Refinitiv.

Besides ESR, Chinese internet giant Alibaba is said to be eyeing a second listing on the HKEX of up to $20 billion while Belgian brewer AB InBev is looking to raise up to $5 billion for its IPO in Hong Kong this July.

“ESR has the largest development pipeline in aggregate across the major APAC markets. With the increasing demand for modern warehouse facilities in the region, we are well positioned to capitalise on this growth with strong on-the-ground execution and tenant sourcing capabilities,” said ESR co-founders and co-CEOs Jeffrey Shen and Stuart Gibson.

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

It has since grown to become the largest Asia Pacific-focused logistics real estate platform by gross floor area and by value of the assets. As of last December 31, the AUM of ESR stood at about $16 billion.

Moving forward, ESR intends to capture the enormous growth in the Asia Pacific region by a number of growth strategies.

“Firstly, ESR will continue to execute its integrated strategy and capitalise on the significant market opportunities across APAC. Secondly, it will leverage its scale and geographic presence to expand into new growth markets to deepen its regional connectivity.

“Thirdly, the group will expand its fund management platform across geographies, strategies and liquidity profiles and attract new capital partners while bringing existing capital partners across markets. Last but not the least, it will strategically explore and expand into adjacent businesses and investment products within Asia,” said the firm.

Deutsche Securities Asia Limited and CLSA Capital Markets Limited are the joint sponsors of the IPO deal.