Consortium aims to seal ESR buyout at more than $7 billion, sources say

By Kane Wu and Julie Zhu

HONG KONG (Reuters) -A consortium including Starwood Capital Group and Warburg Pincus aims to finalise a deal to take ESR Group private in the coming weeks, valuing the Hong Kong-listed real estate fund manager at more than $7 billion, two sources said.

ESR's founders and a unit of sovereign wealth fund Qatar Investment Authority are also part of the consortium. Since the offer, the shares of the company are up 14.4% from the closing price on the last trading day before the first take-private announcement on May 14, LSEG data showed.

The sources, who have knowledge of the matter, declined to be named as the information was confidential.

Representatives of the consortium and Warburg declined to comment, while ESR did not respond to requests for comment.

The group halted trading of its shares on Friday, pending the release of an announcement in relation to inside information about takeovers and mergers, ESR said in an exchange filing.

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, as well as 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 added.

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 the 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.

ESR shares have fallen in recent years amid China's property market slump. The stock is down more than 60% from a 2021 peak, while the Hang Seng benchmark has fallen about a third in the same 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 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 ($337 million) from the listing.

ESR said on Friday it has launched the offering on the Shanghai Stock Exchange, with details including the offer price to be announced later.



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 = 7.2345 Chinese yuan renminbi)

Source: Investing.com