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ESR Gets Non-Binding Takeover Bid From Starwood Consortium

Dong Cao, Pei Li and Manuel Baigorri

13 May 2024 at 12:12 pm·3-min read

(Bloomberg) -- A consortium featuring investors including Starwood Capital Group and SSW Partners is considering a buyout of Asian warehouse developer ESR Group Ltd., injecting more life into dealmaking in Hong Kong.

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ESR has received a non-binding and conditional proposal from Starwood, Sixth Street Partners and SSW about a possible privatization, according to a filing on Monday that confirmed an earlier Bloomberg News report.

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Some existing investors in ESR may roll over parts or all of their stakes in any deal, people familiar with the matter said, asking not to be identified discussing confidential information.

Read More: ESR Group Halted Pending HK Takeover Code Announcement

Take-private transactions are on the rise in Hong Kong, where dealmaking activity in general has been lackluster. ESR would be a high-profile case, along with the likes of L’Occitane International SA, whose owner Reinold Geiger is taking the skincare company private, with the help of Blackstone Inc. Luggage-maker Samsonite International SA has also considered such a move.

Starwood Capital said in March that its affiliate Sequoia Investco agreed to buy a 10.7% stake in ESR in a transaction with Stuart Gibson and Charles de Portes, co-founders of the Hong Kong-listed firm. Starwood Capital Chairman and Chief Executive Officer Barry Sternlicht said at the time that ESR had important market positions in logistics and data centers, key growth areas for his firm.

ESR says it has about $156 billion in assets under management, focused on sectors including logistics and data centers, and is the biggest real-asset manager in the Asia Pacific region.

Bloomberg News reported previously that ESR’s owners were studying options, including taking the company private, prompting a more than 9% jump in its shares on Feb. 21. Still, it hit a record low of HK$7.45 in March and is 67% below a peak in early 2021. ESR has a market value of HK$42 billion ($5.4 billion).

Read More: Bankers Find One Bright Spot in Hong Kong as Buyouts Multiply

ESR manages real estate assets in markets including China, Japan, South Korea, Australia, Singapore, India and New Zealand. It raised about HK$14 billion in its Hong Kong initial public offering in 2019.

After being one of the world’s worst-performing benchmarks for several months, Hong Kong’s Hang Seng Index has posted steady gains in recent weeks, rising about 17% since April 16.

Founded in 1991, Miami-headquartered Starwood Capital has about $115 billion of assets under management and 16 offices in seven countries, its website shows. It says it has invested in virtually every real estate category globally.

SSW was founded in 2021 by ex-Lazard Inc. bankers Antonio Weiss and Joshua Steiner, and former Goldman Sachs Group Inc. executive Eric Schwartz. Steiner is also a board member at Bloomberg Inc.

Sixth Street was created in 2009 as a dedicated global credit and credit-related investing platform within TPG Inc. It separated from TPG in 2020 and now manages more than $75 billion in assets.

--With assistance from Low De Wei and Gillian Tan.

(Adds details on Sixth Street in final paragraph.)

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©2024 Bloomberg L.P.

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