June 13, 2019 / 9:51 AM / 3 months ago

Warburg Pincus-backed ESR shelves largest HK IPO this year

HONG KONG (Reuters) - Logistics real estate developer ESR Cayman Ltd, backed by private-equity firm Warburg Pincus, said it would postpone its up to $1.24 billion Hong Kong listing that would have been the largest in the Asian hub so far this year.

The company, which had planned to raise between $1.16 billion and $1.24 billion, said in a filing on Thursday it had made the decision “in light of the current market conditions”.

Two people with direct knowledge of the matter said ESR had targeted a relatively aggressive valuation that had made the deal a hard sell amid challenging market conditions.

Demand was too weak and Warburg Pincus will decide later whether to relaunch the deal, one of the people said. It is unclear how long it will remain shelved, the sources said.

ESR, which manages property-focused funds and vehicles as well as its own directly held property investments, had been due to price its IPO on Thursday and begin trading on June 20.

Markets are jittery in Hong Kong at present. The benchmark Hang Seng Index tumbled 1.8% at one point on Thursday, following Wednesday’s 1.7% fall, amid massive street protests over a planned extradition law with mainland China.

The index has gained 5.6% this year, lagging a 22.4% jump in China’s blue-chip CSI 300 and a 14.9% rise in the U.S. S&P 500.

The sources, who declined to be identified as they were not authorized to speak on the matter, however, said the deal had not been significantly affected by the political unrest because the firm was focused on global investors, not Chinese family-and-friend-type investors.

But then mass street protests would not help the overall financial markets in the city either, one of them added.

Seven shareholders were selling shares in the IPO, including Warburg Pincus unit WP OCIM, Goldman Sachs unit Goldman Sachs Investments Holdings (Asia) Ltd, and e-commerce firm JD.com Inc’s Jingdong Logistics Group Corp.

CLSA and Deutsche Bank are joint sponsors for the IPO.

Reporting by Julie Zhu; Writing by Alun John; Editing by Stephen Coates and Himani Sarkar

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