Consortium aims to seal ESR buyout in coming weeks, likely valuing it at over $7 bln, say sources

ESR

28/11/2024 09:33

* 
      Offer more than 18% premium to ESR's average share price
in the
past month, Reuters calculates
    

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      Terms of the deal are not finalised, sources say 
    

        * 
      ESR shares down over 60% from their 2021 peak
    

  
    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 over $7
billion, said two sources.
    The potential offer from the consortium, which according to
ESR also includes its founders and a unit of sovereign wealth
fund Qatar Investment Authority, would represent a premium of
more than 18% over ESR's average share price over the past month
of HK$11.06, according to Reuters calculations.
    The sources, who have knowledge of the matter, declined to
be named as the information was confidential.
    Representatives for the consortium and Warburg declined to
comment, while ESR did not respond to requests for comment.
    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 and 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 said.
    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 that 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. 
    The deal comes as ESR shares have fallen in the last couple
of years amid China's property market slump. The stock is down
over 60% from a 2021 peak, while the Hang Seng benchmark  .HSI 
has fallen about a third during the 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 (IPO) 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 ($336 million) from the listing.
    That listing has yet to happen.
    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 = 7.7816 Hong Kong dollars)

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