Consortium aims to seal ESR buyout at more than $7 bln, sources say (updated)

ESR

29/11/2024 04:17

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      Terms of the deal are not finalised, sources say 
    

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      ESR shares down over 60% from their 2021 peak
    

  
 (Adds ESR trading halt on Friday; launch of REIT IPO)
    By Kane Wu and Julie Zhu
       HONG KONG, Nov 28 (Reuters) - A consortium including
Starwood Capital Group and Warburg Pincus aims to finalise a
deal to take ESR Group  1821.HK  private in the coming weeks,
valuing the Hong Kong-listed real estate fund manager at more
than $7 billion, two sources said.
    ESR's founders and a unit of sovereign wealth fund Qatar
Investment Authority are also part of the consortium. Since the
offer, the shares of the company are up 14.4% from the closing
price on the last trading day before the first take-private
announcement on May 14, LSEG data showed.
    The sources, who have knowledge of the matter, declined to
be named as the information was confidential.
    Representatives of the consortium and Warburg declined to
comment, while ESR did not respond to requests for comment.
    The group halted trading of its shares on Friday, pending
the release of an announcement in relation to inside information
about takeovers and mergers, ESR said in an exchange filing.
    Warburg Pincus, ESR's top shareholder with a 14% stake,
plans to roll over its holdings into the future private company
rather than cash out, said the two sources, as well as two other
people with knowledge of the matter.
    Terms of the deal, including the offer price, are not
finalised, however, and can still change, the sources added.
    ESR said in May it had received an initial proposal from a
consortium led by Starwood Capital Group, Sixth Street Partners
and SSW Partners, aiming to take the company private. 
    It said the proposal, received on April 25, would allow its
shareholders to choose between receiving cash and rolling their
shares into the new company, subject to the terms of the final
roll-over arrangements. The consortium subsequently expanded to
include Warburg Pincus and others.
    ESR shares have fallen in recent years amid China's property
market slump. The stock is down more than 60% from a 2021 peak,
while the Hang Seng benchmark  .HSI  has fallen about a third in
the same period.
    ESR manages a range of property-focused funds and its own
property investments. It went public in Hong Kong in 2019 after
pricing its initial public offering at HK$16.8 per share,
raising $1.6 billion.
    In June, the group said it had received approval from
China's securities regulator to list its logistics real estate
firm in the country and expected to raise around 2.44 billion
yuan ($337 million) from the listing.
    ESR said on Friday it has launched the offering on the
Shanghai Stock Exchange, with details including the offer price
to be announced later.
    ESR was co-founded by its executives and private equity firm
Warburg Pincus in Shanghai in 2011 and has expanded over the
years via a string of acquisitions. 
($1 = 7.2345 Chinese yuan renminbi)

 (Reporting by Kane Wu and Julie Zhu; Editing by Sumeet
Chatterjee, Mark Potter and Nicholas Yong)
 ((julie.zhu1@thomsonreuters.com;))