A consortium featuring investors including Starwood Capital Group and SSW Partners is considering a buyout of Asian warehouse developer ESR Group, people familiar with the matter said, injecting more life into dealmaking in Hong Kong.
The group is talking with minority shareholders to gauge interest for a potential take-private deal, according to the people, who asked not to be identified discussing confidential information. Some existing investors may roll over parts or all of their stakes, though nothing has been finalized yet, the people said.
While an announcement on the proposal could come as soon as Monday, deliberations are preliminary and may not lead to a buyout, the people said.
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 didn’t respond to requests for comment outside of regular US office hours. A representative for ESR declined to comment. New York-based SSW, which was founded in 2021, didn’t immediately respond to a request for comment.
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.
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ESR says it has about US$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 (US$5.4 billion).
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.
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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 US$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.
