With protests over an extradition bill bringing an estimated one million people into the streets over the weekend, and police firing over 150 rounds of tear gas at demonstrators in a single day, logistics real estate platform ESR Cayman has decided to delay an IPO that had been expected to raise up to $1.24 billion.
With the offer having begun on 6 June, and ending on 12 June, the Warburg Pincus-backed warehouse developer and fund manager had planned to have its shares start trading on the Hong Kong stock exchange on 19 June. Instead, the company announced late on 13 June that it would postpone the offering due to turmoil in the city.
ESR had originally filed for its IPO in March of this year, and began marketing the offering earlier this month.
Market Conditions Bring IPO to a Halt
“In light of the current market conditions, the Company, having consulted the Joint Global Coordinators, has decided that the Global Offering will not proceed at this time,” ESR director Jinchu (Jeffrey) Shen said in a statement, adding that it would not enter into an international underwriting agreement related to the share sale and that its Hong Kong underwriting agreement would not become unconditional.
Under a term sheet shared with investors, the company had been making available 560.7 million shares at a price of HK$16.2 to HK$17.4 each. Had the IPO gone forward at the top of the forecast range, it would have value the Hong Kong-based firm at $6 billion, and would have ranked as the largest IPO so far this year in the Asian financial hub.
Now ESR says that it will be refunding any monies paid by investors who had already subscribed to the offering, including fees and levies.
Not Business as Usual in Hong Kong
The IPO cancellation came as protests this week, and police countermeasures, have made parts of downtown Hong Kong inoperative. Office workers at some companies in Central were sent home today because of security concerns and due to widespread exposure to tear gas and pepper spray fired by police.
On Thursday morning, the secretariat of Hong Kong’s legislative council cancelled hearings the planned extradition bill, after tens of thousands of protesters blocked access to government buildings in a move to prevent the imposition of a law which many see as compromising the freedom of Asia’s wealthiest city.
An account by Reuters also cited analysts who suggested that ESR’s valuation, which some saw as high, may have added to challenges around marketing shares in the logistics real estate firm.
In its statement, ESR said that, despite the postponement, the company remains committed to growing its business in the region and thanked prospective investors for their support. The company did not suggest a future date for the share offering.