ESR Cayman (1821.HK)

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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.

More details in
Specuvestor: Asset - Business - Structure.
ESR Cayman’s shares advance in Hong Kong trading debut, helping market claw back some of its mojo lost in trade war, street protests
* The logistics real estate developer’s IPO is the second-biggest listing in Asia and on the Hong Kong stock exchange after Budweiser Brewing Company APAC
* Listing is another boost to the Hong Kong stock exchange as it fights for global fundraising crown with New York, Nasdaq

Chad Bray, Snow Xia  
Published: 9:37am, 1 Nov, 2019
Updated: 1:42pm, 1 Nov, 2019

ESR Cayman, the operator of logistics warehouses and industrial real estate, was lucky the second time around in the capital market, as its shares advanced in their Hong Kong stock exchange trading debut.

ESR shares opened at HK$17.62, or 5 per cent above their initial public offering price of HK$16.80. That was the midpoint of its initial pricing range of HK$16.20 and HK$17.40 per share.

The offer, which raised US$1.6 billion for the Warburg Pincus-backed company, was the second-biggest in Asia and on the Hong Kong stock exchange this year after the US$5.8 billion IPO in September by Budweiser Brewing Company APAC, according to Bloomberg data.

ESR traded as high as HK$18.06 in the first hour of Hong Kong’s morning session. Five of the largest offerings this year in Asia have had mixed debuts. China Railway Signal saw its stock price double, while Budweiser posted a 4 per cent gain on September 30 and Bangkok-based Asset World had a flattish performance in Thailand this month.

“In the first go-around, in the first few months, we got sandwiched in-between the geopolitical events. There are so many things you can’t control,” said Jeffrey Perlman, the ESR chairman and a managing director at Warburg Pincus. “The feedback we got from prospective investors, they really want to see this as a public company. And on the back of the successful IPO, it certainly gives us a lot of conviction alongside that feedback we got from the market.”

Budweiser and ESR both had a change of heart this summer, when they postponed their fundraising plans amid Hong Kong’s escalating civil unrest, after an estimated 1 million people marched in opposition to a controversial extradition bill. Since the postponement of their IPOs, Hong Kong’s worst political crisis in decades had descended into frequent street clashes between police and protesters.

More details in
Specuvestor: Asset - Business - Structure.

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