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ESR Cayman delays US$1.4b IPO in HK amid trade tension market jitters: sources

[HONG KONG] Logistics property developer ESR Cayman has delayed the launch of what would have been Hong Kong's biggest initial public offering (IPO) so far this year, according to two people who cited the rise in market volatility amid fears over escalating trade tensions.

ESR Cayman, backed by private equity firm Warburg Pincus LLC, was due to launch the IPO of as much as US$1.4 billion on Monday. It could still open books for the deal later this week depending on the market mood, the people with direct knowledge said, declining to be named because they were not authorised to speak on the matter.

ESR did not immediately respond to a request for comment.

The delay comes as fears rise that US-China trade tensions and Washington's new threats of tariffs against Mexico could push the global economy towards a recession. On Monday, oil prices dropped, with Brent crude futures near a four-month low, while the 10-year US Treasuries yield held near 2.123 per cent - a level last seen in September 2017.

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ESR manages a range of property-focused funds and vehicles as well as its own directly held property investments. According to its prospectus, it is the largest Asia-Pacific logistics-focused property platform.

The company's IPO launch on Monday was due to mark a pick-up in listings in Hong Kong, which is lagging far behind its rival US exchanges in terms of capital-raising with just US$5.9 billion to its credit this year, compared with the combined US$26.9 billion raised by Nasdaq and the New York Stock Exchange, according to data from Refinitiv.

Two other deals, which could raise US$1.7 billion between them, are still due to price in Hong Kong this week, while last week Reuters reported that Chinese e-commerce giant Alibaba Group Holding was considering a second listing in Hong Kong of up to US$20 billion.

At the top end of ESR's IPO price range, the deal would value the company at US$6.2 billion.

ESR was formed in 2016 by the merger of the Japan-centric Redwood Group and China-focused e-Shang, which was co-founded with Warburg Pincus in 2011. Warburg Pincus held 38.4 per cent of the group ahead of the IPO.

The group plans to use the proceeds to pay down debt and redeem preference shares, as well as to invest in property assets and consider potential acquisitions. CLSA and Deutsche Bank are leading the deal.

REUTERS