By Kane Wu and Julie Zhu
A consortium led by Starwood Capital Group and Warburg Pincus is in the final stages of completing a deal to take ESR Group private, with the valuation of the Hong Kong-listed real estate fund manager exceeding $7 billion, according to two sources familiar with the matter.
The consortium also includes ESR’s founders and a unit of the Qatar Investment Authority sovereign wealth fund. Following the offer, the company’s shares have risen by 14.4% since the first announcement of the take-private plan on May 14, according to LSEG data.
The sources, who spoke on condition of anonymity due to the confidential nature of the information, revealed that ESR’s trading was halted pending an announcement related to insider information on takeovers and mergers.
Warburg Pincus, the largest shareholder of ESR with a 14% stake, intends to retain its holdings in the future private company rather than selling them, as stated by sources familiar with the matter.
While the terms of the deal, including the offer price, are not yet finalized and subject to change, ESR confirmed in May that it had received an initial proposal from a consortium led by Starwood Capital Group. The proposal allows shareholders to opt for cash or roll over their shares into the new company.
ESR has faced challenges in recent years amid China’s property market downturn, with its shares declining by over 60% from a 2021 peak. The company manages various property-focused funds and investments, having gone public in Hong Kong in 2019.
In June, ESR received approval from China’s securities regulator to list its logistics real estate firm in the country, aiming to raise around 2.44 billion yuan ($337 million) from the listing.
ESR has initiated the offering on the Shanghai Stock Exchange, with further details, including the offer price, to be disclosed later.
ESR, founded by its executives and private equity firm Warburg Pincus in Shanghai in 2011, has grown through a series of acquisitions over the years.
($1 = 7.2345 renminbi)