A consortium led by private equity firms Starwood Capital Group and Warburg Pincus has made a HKD55.19bn ($7.09bn) bid to take Hong Kong-based real estate investment firm ESR Group private, according to a report by Reuters citing a company announcement on Wednesday.
The offer represents a 55.7% premium to ESR’s closing price on 24 April, before the non-binding proposal was submitted.
The offer price of HK$13 per share underscores the consortium’s confidence in the real estate company as China seeks to recover from a severe property market downturn, which has led to a 60% decline in ESR’s stock value since its February 2021 peak.
Under the proposed deal, shareholders can choose from three options: to receive HKD13.00 per share in cash; exchange one equity share for every existing share held; or a combination of cash and equity shares.
The consortium stated that 51.2% of disinterested shareholders have already provided irrevocable commitments to support the proposal as of 4 December.
ESR has applied to the Hong Kong Stock Exchange to resume trading on 5 December, following a trading halt announced last Friday. Morgan Stanley Asia and Deutsche Bank AG, Hong Kong Branch are serving as co-lead financial advisers, with JLL acting as the consortium’s real estate adviser.
The consortium initially emerged in May, led by Starwood Capital Group, Sixth Street Partners, and SSW Partners. It later expanded to include Warburg Pincus, ESR’s largest shareholder with a 14% stake, and Qatar Holding, a subsidiary of the Qatar Investment Authority.
Founded as a major player in property-focused funds and investments, ESR went public in 2019, raising $1.6bn through an initial public offering priced at HKD16.8 per share.
