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Morgan Stanley gets plum role in US$1.45b HK IPO relaunch

Hong Kong

MORGAN Stanley has usurped rivals including Deutsche Bank, Citigroup, Credit Suisse and Goldman Sachs to lead the relaunch of a US$1.45 billion IPO - Hong Kong's second-largest this year - in an unusually brutal shuffling of banks' roles on a big deal.

The Wall Street bank was approached by ESR Cayman and its main backer, Warburg Pincus, in August to develop a rescue plan for ESR's initial public offering (IPO), according to two sources involved in the transaction, after the industrial property investor was forced to pull its original planned float in June. The sources declined to be identified because the discussions were not public.

In its second attempt, ESR is seeking to sell shares worth up to US$1.45 billion, giving it a market capitalisation of as much as US$6.74 billion - the same as it sought in June.

Morgan Stanley, Citigroup, CLSA, Credit Suisse and Goldman Sachs declined to comment on the shuffling of banks working on the deal. Warburg Pincus and ESR also declined to comment. Although Morgan Stanley had no role in the first IPO attempt, it has usurped its rivals and is now leading the relaunched offering as the so-called "lead left" JGC. "It's very rare to see a bank not working on a deal at first get a senior role as JGC (joint global coordinator) - not to mention in ESR's case, the new bank is actually leading the relaunched deal," said one senior equity capital banker not involved in this transaction.

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The top-ranked banks in a Hong Kong IPO are known as sponsors, who carry legal liability for the accuracy of the prospectus. Under them are joint global coordinators. The bottom rung are joint bookrunners (JBRs), who collect orders from would-be investors but do not usually play a bigger role.

The June deal was led by Deutsche Bank and CLSA as the lead sponsors with Citigroup, Credit Suisse, DBS and Goldman Sachs listed as joint global coordinators.

This time, Morgan Stanley is leading investor meetings for the deal in London on Wednesday, continuing a roadshow which has already taken in Singapore and Hong Kong and will head to New York on Thursday.

"ESR and Warburg Pincus were not happy with some of the banks and wanted to kick some of them out last time. But to have a smooth relaunch of the deal as soon as possible, they have brought in Morgan Stanley and kept these banks," said the source. REUTERS

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