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ESR files for Hong Kong IPO

ESR Cayman, the sponsor of ESR-Reit, on Sunday said that it had on Feb 28 made submissions to the Stock Exchange of Hong Kong (HKEX) for a proposed initial public offering (IPO) of its shares to be listed on the HKEX.

Various media reports, citing sources, said that the logistics real estate developer is looking to raise US$1-1.5 billion.

ESR, the largest Asia-Pacific focused logistics real estate platform, was formed by a merger of Shanghai-based warehousing services firm e-Shang and Singaporean logistics real estate investment firm The Redwood Group in 2016.

It builds and manages logistics facilities that cater to e-commerce firms, bricks-and-mortar retailers and manufacturers. It also manages funds and investment vehicles that invest in logistics properties.

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Warburg Pincus co-founded e-Shang in 2011 with two Chinese entrepreneurs and brought in investors such as APG Asset Management NV, CPPIB and Goldman Sachs. ESR is now 38.35 per cent owned by a Warburg Pincus subsidiary.

ESR said in its prospectus that it would use the proceeds of the share sale to pare existing debt, finance the completion of projects already in the pipeline, and to further expand its footprint through mergers and acquisitions.

According to its draft prospectus, it made a net profit of US$132.7 million on the back of US$170.2 million in revenue in the first nine months of 2018. The increase in bottom line was about 7 per cent year-on-year.

In the first three quarters of 2018, ESR made 31 per cent of its revenue from warehouse rentals, with another 58 per cent from management fees from its fund management business. Additional revenues came from construction services and sales of solar energy generated from its facilities.

CLSA and Deutsche Bank are the IPO sponsors.