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ESR Cayman
06-06-2019, 12:40 PM.
Post: #1
ESR Cayman
ESR Cayman, Asia-Pacific’s largest warehouse landlord, set to raise up to US$1.2 billion in Hong Kong’s biggest IPO so far this year
* ESR Cayman, backed by private equity firm Warburg Pincus, is issuing 560.7 million shares, to raise up to US$1.24 billion
* Reserves greenshoe option to issue another 84.1 million shares

Lam Ka-sing
Published: 8:37pm, 5 Jun, 2019

ESR Cayman, the largest logistics landlord in Asia-Pacific backed by private equity firm Warburg Pincus, has shrugged off the impact of the US-China trade war on the capital markets by launching Hong Kong’s biggest IPO so far this year.

The company is seeking to raise up to HK$9.76 billion (US$1.24 billion) by issuing 560.7 million shares at an indicative offer price range of HK$16.2 to HK$17.4 per share. It has reserved the option of issuing an additional 15 per cent or 84.1 million shares, taking the potential fundraising to HK$11.2 billion.

Jeffrey Perlman, chairman of ESR, said at a press conference to announce the details of the initial public offering on Wednesday that the company had actually benefited from the trade war.

“There has actually been a huge boom in our business, accelerating our growth rate in markets like China because many of the well-located land parcels had factories on them and many of those factories have shifted production in some instances to places like Vietnam,” said Perlman, who is also the managing director and head of Southeast Asia at Warburg Pincus. “And so we’re working directly with local governments [to use] factories [that are] no longer producing. So this [has been] very helpful and additive to our business over the last 12 to 18 months.”

It is the largest Asia-Pacific focused logistics real estate platform by gross floor area and by value of assets owned directly and by the funds and investment vehicles it manages, according to consultancy JLL.

“A typical e-commerce tenant requires three times the space than a traditional retailer would need of warehousing. There’s much greater velocity that goes through the warehouse,” said Perlman. “Our vacancy rates in major cities, in some instances, are almost zero.”

ESR said that some 90 per cent of the proceeds will be used to repay debt and the rest will be used for developing logistics property and other investments.

Net profit for the financial year ended December 2018 rose to US$213.13 million, up 5.9 per cent year on year, according to its prospectus. Revenue rose 65.8 per cent to US$254.15 million year on year.

Co-founded by its senior management team and Warburg Pincus in 2011, ESR and the funds and investment vehicles it manages are backed by some of the world’s pre-eminent investors including APG, SK Holdings,, CLSA, Goldman Sachs, CPPIB, Ping An and Allianz Real Estate.

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