ESR halts trading on potential take-private plan, sources say

By Thomson Reuters May 13, 2024 | 5:42 AM

By Kane Wu and Julie Zhu

HONG KONG (Reuters) – Hong Kong-listed real estate fund manager ESR Group, which halted trading in its shares on Monday, is subject to a potential take-private bid from a group of investors including Starwood Capital Group, three people with knowledge of the matter said.

ESR, which is backed by U.S. private equity firm Warburg Pincus LLC, said in a stock exchange filing trading was halted pending an announcement about inside information on the company, pursuant to the Hong Kong code on takeovers and mergers.

Bloomberg first reported that a Starwood-led group is planning to buy out ESR on Monday.

Discussions of the take-private were however at an early stage with terms to be finalised, said the sources and two other people with knowledge of the situation.

The company’s shares closed at HK$10 on Friday, the highest since March 4, translating to a market cap of $5.4 billion, LSEG data showed. The shares have fallen 7.4% this year, compared with an 12% increase in the benchmark Hang Seng Index.

ESR declined to comment any further than its filing. Starwood Capital, a private investment firm focusing on global real estate sector, did not immediately respond to a Reuters request for comment.

The sources declined to be identified as the information was confidential.

Bloomberg reported in February that a group of ESR’s shareholders was exploring options that included a privatisation of the Hong Kong-listed company, citing sources familiar with the discussions.

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.

Headquartered in Miami, Florida in the U.S., Starwood Capital has raised over $75 billion of capital since its inception in 1991 and currently has about $115 billion of assets under management, its website says.

The firm has 16 offices worldwide, including Hong Kong, Tokyo and Sydney in Asia Pacific, the website shows.

($1 = 7.8141 Hong Kong dollars)

(Reporting by Kane Wu and Julie Zhu; Editing by Tom Hogue and Jan Harvey)