ESR, a Hong Kong-based logistics real estate firm, has agreed to buy 100% of ARA Asset Management, an Asia-Pacific real estate manager, for $5.2 billion in stock and cash, in a transaction that will create the world’s No. 3 listed real estate asset management company, ESR said in a statement today.
ESR, which went public at the Hong Kong Stock Exchange in 2019, will issue $4.7 billion of consideration shares and vendor loan notes shares. It will also pay $519 million in cash funded by a $250 million share placement to Sumitomo Mitsui Banking Corp. and $269 million in debt and internal resources.
ESR’s founders — including billionaire executive director Shen Jinchu — along with OMERS and JD.com represent 46% of its ownership and have provided irrevocable undertakings to vote in favor of the purchase. Other shareholders include GIC and funds associated with Warburg Pincus and Morgan Stanley.
Founded in 2002 and listed in Singapore between 2007-2017, ARA has $95 billion in gross assets under management. (See announcement here.)
“Our vision has always been to build a leading fund manager focused on technology enabled real estate, especially logistics and more recently data center, on the back of major secular trends including the rapid rise of e-commerce, digital transformation and the financialization of real estate in Asia Pacific,” said Jeffrey Perlman in a statement on Thursday.
“We are currently witnessing a ‘once in a generation’ change in real estate where leading global investors are seeking to rebalance their portfolios by divesting institutional quality assets in order to redeploy that capital back into New Economy real estate where they have been meaningfully underweight,” Perlman said.
The transaction is subject to customary closing conditions including, amongst others, regulatory approvals, ESR said. Closing is expected by the end of 2021 or first quarter 2022.