Starwood Group is said to mull buyout of warehouse developer ESR

Deliberations are preliminary and may not lead to a buyout

A consortium led by investors including Starwood Capital Group is considering a buyout of Asian warehouse developer ESR Group Ltd., according to people familiar with the situation.

The group is talking with minority shareholders to gauge interest for a potential take-private deal, the people said, asking not to be identified discussing confidential information. Some investors may roll over parts or all of their stakes, though nothing has been decided yet, the people said. 

While an announcement on the proposal could come as soon as today, deliberations are preliminary and may not lead to a buyout, the people said.

Starwood Capital didn’t respond to requests for comment outside of regular US office hours. A representative for ESR declined to comment. 

Starwood Capital said in March that an affiliate had agreed to buy a 10.7% stake in ESR in a transaction with Stuart Gibson and Charles de Portes, co-founders of the Hong Kong-listed firm, which says it has about US$150 billion in assets under management. 

Bloomberg News reported earlier that ESR’s owners were studying options, including taking the company private, prompting a more than 9% jump in its shares on Feb. 21. Still, it hit a record low of HK$7.45 in March and is 67% below a peak in early 2021. ESR has a market value of HK$42 billion (US$5.4 billion). 

Other ESR shareholders include Warburg Pincus and Omers Administration Corp.

ESR manages real estate assets in markets including China, Japan, South Korea, Australia, Singapore, India and New Zealand. It raised about HK$14 billion in its Hong Kong initial public offering in 2019. 

After being one of the world’s worst-performing benchmarks for several months, Hong Kong’s Hang Seng Index has posted steady gains in recent weeks, rising about 17% since April 16.