ESR Expands Leadership Team, Hones Focus After $7B Privatisation

Following a $7 billion privatisation, real estate fund manager and developer ESR started a new phase in its history on Friday as a private company after the company’s shares stopped trading on the Hong Kong exchange last month.

With the company now owned by a consortium of investors including investment managers Starwood Capital Group, SSW Partners, Sixth Street and Warburg Pincus, along with the Qatar Investment Authority, Canada’s Ontario Municipal Employees Retirement System, Sumitomo Mitsui Banking Corporation, and its founders, ESR has expanded its management team as it plots a transformation of its property investment business.

As part of the reworking of the industrial real estate specialist, Singapore-based ESR has promoted Phil Pearce, formerly its deputy group CEO, to company president. 

With Pearce set to oversee day to day operations while continuing to lead ESR’s business in Australia and New Zealand, he spoke with Mingtiandi about the company’s priorities in its new private form.

Finding Long Term Flexibility

With ESR’s stock no longer traded on markets where investors can buy or sell at the speed of light, Pearce and the rest of the management see opportunities to take on initiatives that might not have been possible while listed on a public exchange.

“We can do things in the short term, which might initially be earnings dilutive, but would actually build enterprise value in the long term,” Pearce said. “We can make decisions which are long term focused and which are really about long term value creation.”

That ability to focus on objectives further down the road fits with ESR’s belief in logistics as a beneficiary of major trends reshaping economies in the region.

“The e-commerce story is still intact and it’s still driving growth,” Pearce said. “Korea, this year or next year, is going to be the first market in the world where online sales overtake traditional brick and mortar retail. So the thesis and the growth is still intact.”

With ESR having closed on over $1 billion in capital for its first data centre fund in 2022, the company broke ground on a 72MW server facility in Japan during April, with Pearce seeing potential for the sector to account for a major chunk of the group’s business in the coming years. 

“The other hot asset class at the moment (apart from logistics) is obviously data centres,” Pearce said. “We see where data centres are now and where logistics was 20 years ago, and we see parallels. You have seen cloud computing and 5G drive take up for data centre space significantly.”

While demand for data centres was already growing rapidly, Pearce sees artificial intelligence giving the industry the kind of turbocharger that logistics received from online shopping. 

“Now you’re seeing AI as a new driver of demand for data centre space, and Asia is expected to be the biggest beneficiary of demand for data centres,” he said. “We have three gigawatts of powered sites and a further pipeline, so that is a big focus and we expect it to be a major growth driver.”

Core Markets and India Growth

Following the privatisation, ESR’s management is getting to work on behalf of its new ownership, with the company’s leadership setting out some priorities for its new life as a private enterprise. 

“The key strategic objectives are to simplify the business, bolstering our balance sheet and recycling capital,” Pearce said. “We aim to grow the core of our business, which includes our fund management platform, focusing on logistics and data centres, as well as infrastructure.” 

Part of that commitment to focus means continuing the company’s transformation from its earliest roots as a developer toward an asset-light model with the management set to look at assets on its balance sheet for potential disposals. 

With Asia Pacific’s most developed markets, including Japan, Korea and Australia in vogue with investors looking for low-risk strategies in the current environment, ESR’s management sees the company well-positioned to help institutions deploy capital in those locations. 

“We are a significant player in each of those markets (Japan, Korea and Australia), and that echoes what capital wants,” Pearce said. “That has played into our strengths,” he added, while pointing to India as another major market.”

Revamped Team

The promotion for Pearce was part of broader revamp of ESR’s management aimed at honing the business as it refocuses on core geographies and asset classes.

While co-founders Stuart Gibson and Jeffrey Shen will continue to serve as co-CEOs of ESR, former Macquarie executive Brett Robson, who served as a senior advisor to the buyout consortium during the privatisation, will now be the company’s independent board chair.

Along with Pearce moving up to president, group chief operating officer Matthew Lawson was upgraded to chief financial officer one month ago and will retain that title under the new structure. 

With ESR having ranked as Asia Pacific’s largest fund manager in 2024 with $71.4 billion in fee-related assets under management, the company has divided its chief investment officer role with incumbent Josh Daitch now serving as CIO for investor solutions and investments. The other half of the role will be filled by former Starwood Capital and Oxford Properties executive David Matheson, who joins the company as CIO for group strategy and investments. 

Logos founder John Marsh, who joined ESR through its 2022 acquisition of that company’s parent group, ARA Asset Management, has been named group head of development and will continue to chair ESR’s business in Australia and New Zealand. Karine Scelles, who joined the company earlier this year as chief people officer, will continue in her role.