Qatar Holding, which is owned by Qatar’s sovereign wealth fund, Qatar Investment Authority (QIA), has joined a consortium proposing to take the Hong Kong-listed ESR Group private, according to a filing put out by ESR Group on the Hong Kong Exchange (HKEX) on Oct 4. ESR Group is the sponsor of some of Singapore’s REITs such as ESR-LOGOS REIT J91U and Suntec REIT. Qatar Holding holds about 127.3 million shares in ESR Group or a 3% stake. The expanded consortium now has a total stake of 1.69 billion shares or a 39.9% stake in ESR.
The group received an an updated non-binding proposal from the consortium looking to take the group private, after the initial indicative proposal sent on April 25. The proposal remains subject to additional due diligence, which includes ESR’s financials. There was no mention of price.
The updated proposal also confirms that ESR’s shareholders can choose between receiving their offer in cash, roll their shares into the go-forward private company, or do both.
Warburg Pincus and the group’s founders say they “remain supportive” of the updated proposal and have become members of the consortium, which is still led by private equity (PE) firm Starwood Capital and investment firms Sixth Street Partners and SSW Partners.
For the 1HFY2024 ended June 30, ESR Group reported a net loss of US$209 million ($272.5 million), reversing from a net profit of US$313.9 million in the 1HFY2023. The lower-than-expected bottomline was largely attributed to noncash asset revaluations and a lack of promote fees, according to ESR’s statement.
The group’s revenue fell by 31.4% y-o-y to US$312.5 million mainly from lower management fees, which fell by 37% y-o-y to US$253.7 million. The lower management fees stemmed from the lack of promote fees in 1HFY2024, compared to US$136 million in 1HFY2023. The group recognises promote fees from the recapitalisation or realisation of its managed funds.
See also: ESR Group receives offer from consortium of investors including Starwood
Group ebitda fell by 76% y-o-y to US$132 million while adjusted patmi stood at a negative US$58 million, compared to US$304 million in 1HFY2023.
Before its 1HFY2024 results announcement, ESR already warned its investors that it expected to record a net loss of around US$210 million for the six months.
On May 13, ESR said it received a proposal from a group of investors who have proposed to take the group private. At the time, Warburg Pincus and ESR’s founders were said to have felt that the proposal was “in the best interests” of ESR’s shareholders and were in discussions with the consortium. At the time, the consortium was interested in 662.1 million shares in the group, representing a 15.7% stake in its total issued shares.
Shares in ESR Group closed 4 HK cents lower or 0.33% down at HK$12.16 ($2.04) on Oct 4.
