ESR delays its IPO in Hong Kong for $ 1.4 billion while the market is tense: sources

HONG KONG (Reuters) – Real estate developer Logistics, ESR Cayman Ltd., has delayed the launch of what would have been Hong Kong's biggest public offering so far this year, according to two people who cited rising market volatility amid fears of escalating trade tensions.

ESR Cayman, backed by private equity firm Warburg Pincus LLC, was to launch the $ 1.4 billion IPO on Monday. He could still open books for the deal later this week, depending on the market mood, said people with direct knowledge, refusing to be named because they were not allowed to speak. .

ESR did not immediately respond to a request for comment.

This delay comes as trade tensions between the United States and China and the new tariff threats imposed by Washington on Mexico could tilt the global economy into recession. On Monday, oil prices fell, with Brent crude futures approaching their lowest level in four months, while the yield on 10-year US Treasury bonds held steady at 2.123%, a level reached in September. 2017.

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

The company's stock market launch Monday was expected to mark a recovery in listings in Hong Kong, which lags far behind its rival US equity markets with only $ 5.9 billion to its credit this year. compared to $ 26.9 billion combined. raised by the Nasdaq and the New York Stock Exchange, according to data from Refinitiv.

Two other agreements, which could yield $ 1.7 billion, are still due to the price in Hong Kong this week, while Reuters announced last week that the Chinese online trading giant, Alibaba Group Holding Ltd, was considering a second Hong Kong introduction of an amount of up to $ 20. billion.

At the top of the price range of the ESR IPOs, the deal would give the company a value of $ 6.2 billion.

ESR was created in 2016 by the merger of the Japanese group Redwood and the Chinese company e-Shang, founded in 2011 with Warburg Pincus. Warburg Pincus held 38.4% of the group before its IPO.

The group expects to use the proceeds of this sale to repay its debts, buy back preferred shares, invest in real estate badets and consider potential acquisitions.

CLSA and Deutsche Bank lead the transaction.