ESR Cayman to revive Hong Kong IPO after shelving offering in June as protests, trade war raged

Chad Bray

ESR Cayman, the logistics real estate developer, is looking to revive its initial public offering in Hong Kong, three months after postponing its listing as an escalation in the US-China trade war and protests in the city weighed on investor confidence.

The Hong Kong firm is the second company to look to come back to the markets this week after Anheuser-Busch InBev said it had resumed its application to list its Asia-Pacific business, Budweiser Brewing Company APAC. AB InBev had scrapped the planned US$9.8 billion listing in July.

“There is no assurance that the company will proceed with the offering,” ESR said in a regulatory filing with the Hong Kong stock exchange on Friday.

ESR postponed its filing on June 13, citing “current market conditions”. The company had hoped to raise up to US$698.8 million in net proceeds in its shelved offering.

Hong Kong faces a drought of initial public offerings as valuations fall

Friday’s filing did not disclose a timetable or size of the offering. The company declined to comment.

A person familiar with the company’s plans said ESR feels confident about the size of its offering “given strong investor appetite” previously and the company’s first-half performance.

ESR reported its first-half profit rose 32 per cent to US$84.1 million, compared with US$63.7 million in the same period in 2018. Revenue jumped 66 per cent to US$155.8 million in the first six months of the year.

As of the end of June, the company had assets under management of US$20.2 billion. It had assets under management of US$16 billion as of the end of 2018.

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A number of companies delayed their IPOs this summer as protests and civil unrest in Hong Kong and a trade war that has raged between the world’s two largest economies for more than a year rattled investor confidence.

But, investors have expressed more confidence in recent days, with the Hang Seng Index gaining 6.1 per cent since its close on September 3. The index was up 0.4 per cent at 27,186.35 in Friday’s morning session.

On September 4, Hong Kong Chief Executive Carrie Lam Yuet-ngor formally withdrew a controversial bill that would have made it easier to extradite criminal suspects to mainland China for trial.

Jeffrey Perlman (right), chairman of ESR Cayman, speaks at the company’s IPO press conference in Hong Kong, on June 5, 2019. The IPO was subsequently scrapped. Photo: K. Y. Cheng

The bill had sparked protests and civil unrest in the city beginning in June, but the debate has evolved to cover a broad range of issues, including income inequality and housing.

On Thursday, US President Donald Trump said he would delay additional tariffs on Chinese-made goods that were set to go into effect on October 1 for two weeks as “a gesture of good will” as Beijing prepares to celebrate the 70th anniversary of the founding of the People’s Republic of China. Chinese and American negotiators also are expected to resume face-to-face discussions next month.

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