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Morgan Stanley elbows out rivals for plum role in $1.5 bln IPO relaunch - sources

Wed 23rd October, 2019 3:53am
* Morgan Stanley involved in 2nd IPO attempt by ESR Cayman 
    * Wall Street bank's move into deal's lead role is unusual 
    * IPO is Hong Kong's 2nd-largest of 2019

    By Scott Murdoch and Julie  Zhu
    HONG KONG, Oct 23 (Reuters) - Morgan Stanley  MS.N  has
usurped rivals including Deutsche Bank, Citigroup, Credit Suisse
and Goldman Sachs to lead the relaunch of a $1.45 billion IPO -
Hong Kong's second-largest this year - in an unusually brutal
shuffling of banks' roles on a big deal.
    The Wall Street bank was approached by ESR Cayman  1821.HK 
and its main backer, Warburg Pincus, in August to develop a
rescue plan for ESR's initial public offering (IPO), according
to two sources involved in the transaction, after the industrial
property investor was forced to pull its original planned float
in June.
    The sources declined to be identified because the
discussions were not public. 
    Morgan Stanley, Citigroup, CLSA, Credit Suisse and Goldman
Sachs declined to comment on the shuffling of banks working on
the deal. Warburg Pincus and ESR also declined to comment. 
    Banks worldwide jostle fiercely for top billing on IPOs,
decided by which ones are listed at the top and which are listed
first, or to the left, of each category. Position matters for
publicity as well as league-table credit - and is usually
reflected in the fees each bank will take.
    Although Morgan Stanley had no role in the first IPO
attempt, it has usurped its rivals and is now leading the
relaunched offering as the so-called 'lead left' JGC. 
    "It's very rare to see a bank not working on a deal at first
get a senior role as JGC (joint global coordinator) - not to
mention in ESR's case, the new bank is actually leading the
relaunched deal," said one senior equity capital banker not
involved in this transaction. 
    The top-ranked banks in a Hong Kong IPO are known as
sponsors, who carry legal liability for the accuracy of the
prospectus. Under them are joint global coordinators. The bottom
rung are joint bookrunners (JBRs), who collect orders from
would-be investors but do not usually play a bigger role.
    "It's certainly not common in the Hong Kong IPO market,"
said one source involved in the transaction. "Several existing
banks couldn't sell the deal as well as the issuer and its main
backer expected, due to the high target valuation last time." 
    The June deal was led by Deutsche Bank  DBKGn.DE  and CLSA
as the lead sponsors with Citigroup  C.N , Credit Suisse
 CSGN.S , DBS  DBSM.SI  and Goldman Sachs  GS.N  listed as joint
global coordinators.
    This time however Morgan Stanley is leading investor
meetings for the deal in London on Wednesday, continuing a
roadshow which has already taken in Singapore and Hong Kong and
will head to New York on Thursday.
    Only Morgan Stanley and Deutsche Bank analysts are producing
research on the deal - typically also a sign of which banks are
leading the transaction. 
    Both Deutsche Bank and CLSA retain their official roles as
sponsors because changing sponsors would have involved
restarting the entire IPO application process, said two sources.
    While Deutsche Bank is also still listed as a JGC, CLSA has
been dropped to a bookrunner role. 
    ESR Cayman made the decision to pull its deal in June on the
day it was due to price, citing "market conditions". Sources at
the time told Reuters that the company had targeted a relatively
aggressive valuation that had made the deal a hard sell in
volatile markets.*:nL4N23K1LK
    "ESR and Warburg Pincus were not happy with some of the
banks and wanted to kick some of them out last time. But to have
a smooth relaunch of the deal as soon as possible, they have
brought in Morgan Stanley and kept these banks," said the same
source involved in the deal. 
    In its second attempt, ESR is seeking to sell shares worth
up to $1.45 billion, giving it a market capitalisation of as
much as $6.74 billion - the same as it sought in June.

 (Reporting by Scott Murdoch and Julie Zhu; Editing by Jennifer
Hughes and Stephen Coates)
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