ESR Cayman delays IPO in HK amid jitters over trade tensions

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 with direct knowledge who cited the rise in market volatility amid fears over escalating trade tensions.

ESR Cayman, backed by private equity firm Warburg Pincus, was due to launch the IPO of as much as US$1.4 billion (S$1.9 billion) yesterday. It could still open books for the deal later this week depending on the market mood, said the people, declining to be named as they were not authorised to speak on the matter.

The delay comes as fears rise that trade tensions between the United States and China, as well as Washington's new threats of tariffs against Mexico, could push the global economy towards a recession.

Yesterday, 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.

ESR Cayman 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.

Its IPO launch was expected to mark a pickup in listings in Hong Kong, which is lagging far behind 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 said Chinese e-commerce giant Alibaba was considering a second listing in Hong Kong of up to US$20 billion.

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

ESR Cayman was formed in 2016 by the merger of the Japan-centric The Redwood Group and the China-focused e-Shang, which was co-founded with Warburg Pincus in 2011.


A version of this article appeared in the print edition of The Straits Times on June 04, 2019, with the headline 'ESR Cayman delays IPO in HK amid jitters over trade tensions'. Print Edition | Subscribe