Warburg-Backed ESR Poised to Raise $1.6 Billion in Hong Kong IPO

(Bloomberg) -- ESR Cayman Ltd., a logistics real estate developer, is set to raise $1.6 billion as it’s planning to price its initial public offering at the middle of a marketed range, people familiar with the matter said.

The company and shareholders including Warburg Pincus LLC and Goldman Sachs Investments Holdings (Asia) Ltd. could price the shares at HK$16.80 apiece, the people said. The shares were marketed at HK$16.20 to HK$17.40 each.

An upsize option to sell an additional 15% of shares will be exercised in full, said the people, asking not to be identified because the information is private. That would increase the total number of shares sold to about 752 million, based on Bloomberg calculations.

The pricing marks a turnaround for ESR, which in June postponed an attempt to raise as much as $1.24 billion, citing unfavorable market conditions. Budweiser Brewing Company APAC Ltd. pulled its first IPO try in July, further denting investor confidence. At $1.6 billion, ESR’s offering is set to trail only Budweiser’s $5.8 billion share sale, according to data compiled by Bloomberg.

A representative for ESR declined to comment.

ESR’s offering attracted the Ontario Municipal Employees Retirement System as a cornerstone investor, with the Canadian pension fund agreeing to subscribe for a total of about $585 million of stock, terms for the deal showed. APG Asset Management, General Electric Pension Trust and JD.com Inc.’s Jingdong Logistics Group Co. are among the seven holders selling shares in the IPO.

ESR’s listing will boost Hong Kong’s IPO volume, which has slumped 43% to $18.7 billion this year, data compiled by Bloomberg show. Despite ongoing anti-government protests and the U.S.-China trade war, the city has been enjoying a good market window, with two billion-dollar-plus listings up at least 10% from their offer price and a number of small-cap IPOs popping on their debuts.

ESR plans to use the IPO proceeds to repay debt, develop logistics properties, and make co-investments in the funds and investment vehicles it manages, according to the prospectus.

ESR’s shares begin trading in Hong Kong on Nov. 1. Deutsche Bank AG and CLSA Ltd. are joint sponsors for the offering.

©2019 Bloomberg L.P.

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