ESR Group Shares Gain on Privatization Proposal

By Amanda Lee

ESR Group's shares climbed to their highest level in almost four years after the Hong Kong-listed real estate fund manager said it had received a privatization proposal from a group of investors.

Shares were up as much as 23% to hit 12.28 Hong Kong dollars (US$1.57) on Tuesday, putting them on track for their biggest one-day percentage gain since March 2020. Shares were last up 21% at HK$12.10.

The Warburg Pincus-backed company said on Monday that it had received a privatization proposal late last month from a consortium including Florida-based Starwood Capital Operations.

The proposal allows ESR's shareholders to opt for cash or roll their shares into the private company.

Warburg Pincus isn't part of the consortium. However, ESR's founders are in discussions with the consortium about its proposal, which the founders welcome and believe would be in the best interest of shareholders, the company said.

ESR, which manages a range of property-focused funds, said it has formed an independent board committee to consider the indicative proposal. Citigroup is acting as the company's financial adviser.

"It is too early to tell whether it will be beneficial or advantageous to ESR Group," Morningstar Research analyst Xavier Lee said, adding that he is waiting for more details on the offer.

The analyst says ESR's share price is temporarily weak due to concerns over the high-interest rate environment. Lee says the company's outlook could improve from the second half of this year, when the U.S. Federal Reserve is expected to cut rates.

Write to Amanda Lee at amanda.lee@wsj.com

Corrections & Amplifications

This article was corrected on May 15, 2024 to reflect ESR Group said it received a privatization proposal from a consortium including Starwood Capital Operations. The original version incorrectly said Starwood led the consortium in the third paragraph.

(END) Dow Jones Newswires

May 13, 2024 23:53 ET (03:53 GMT)

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