Mansoor Ebrahim Al-Mahmoud, CEO of the Qatar Investment Authority

Qatar’s sovereign wealth fund has joined an investor group seeking to acquire industrial builder and fund manager ESR, with the expanded consortium representing about 40 percent of the issued shares of the Hong Kong-listed company.

The Qatar Investment Authority, which holds a 3 percent stake in ESR, is supportive of an updated takeover proposal received by the company on Friday, ESR chairman Brett Krause said in a stock filing. Five months ago a consortium of investors, including Barry Sternlicht’s Starwood Capital, made a non-binding and conditional offer to acquire ESR in a deal that could lead to the company’s privatisation.

The updated plan confirms that shareholders will have the option to receive cash, roll their shares into the go-forward private company or utilise a combination of the two. In addition, key ESR backer Warburg Pincus and the company’s founders remain supportive of the proposal and have become members of the consortium.

“The company is considering the updated proposal and related discussions with the consortium are ongoing,” Krause said. “The outcome of those discussions is uncertain.”

More Due Diligence

QIA joins a consortium led by Starwood, Sixth Street Partners and SSW Partners, with the trio of fund managers collectively holding 15.7 percent of ESR’s issued shares. Private equity major Warburg Pincus holds 14.04 percent and the company’s founders have a 7.43 percent interest.

ESR chairman Brett Krause (Image: ESR)

The consortium’s proposal was made on 25 April, just over a month after Starwood acquired a nearly 11 percent stake in ESR from Redwood Investment, an offshore vehicle controlled by two of the group’s founders, Stuart Gibson and Charles de Portes. The shareholding corresponded to a market value of roughly HK$4 billion ($510 million) based on trading prices at the time.

ESR said the proposal remains subject to additional due diligence being completed to the consortium’s satisfaction, including on the company’s recently released interim financials, which revealed a net loss of $209 million for the first six months of 2024.

Despite what it termed a challenging environment, ESR in the first half boosted total assets under management to $154 billion, up 4.4 percent from a year earlier, with fee-related AUM rising 2.7 percent to $80 billion. The company spotlighted its rapidly expanding data centre platform as a key propellant of the group’s next growth phase.

Monthly Progress Report

In line with Hong Kong securities law, ESR intends to make monthly announcements setting out the progress of talks regarding the takeover proposal until an announcement is made of a firm intention to make an offer or of a decision not to proceed with the offer, Krause said.

The longtime board member assumed the role of chairman in an interim capacity last month to succeed Jeffrey Perlman, who began a new job as CEO of Manhattan-based Warburg Pincus but remains a non-executive director of ESR.

The company plans to appoint an independent non-executive chairman by the first quarter of 2025.