The largest logistics real estate platform focused on Asia-Pacific is acquiring the biggest real estate investment management firm in the region for $5.2bn (€4.38bn).
ESR, which manages some US$34bn of assets on behalf of investors like APG, CPP Investments, Oxford Properties and PGGM, is seeking to buy the larger, more diversified ARA Asset Management, which has US$95bn in assets under management.
ESR’s founders along with OMERS and JD.com, which together own 46% of the company and are represented on the board, have provided irrevocable undertakings to vote in favour of acquiring 100% of the share capital of ARA.
Should shareholders approve the takeover, ARA’s business – founded in 2002 and listed on the Singapore stock exchange in 2007 before being privatised in 2017 – will be combined with ESR’s platform.
ESR said the enlarged business would become the largest real estate and real asset manager in Asia-Pacific.
ESR was founded in 2016 through the merger of e-Shang and Redwood Group, and was listed on the Hong Kong stock exchange in 2019.
ARA also owns a controlling stake in Logos, another Asia-Pacific-focused fully integrated logistics platform with US$17bn of assets under management.
“Our vision has always been to build a leading fund manager focused on technology enabled real estate, especially logistics and more recently data centres, on the back of major secular trends including the rapid rise of e-commerce, digital transformation and the financialisation of real estate in Asia Pacific,” said Jeffrey Perlman, chairman of ESR, said.
“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.
“By creating a one-of-a-kind closed-loop solutions ecosystem for capital partners with the addition of ARA, we can leverage our perpetual capital vehicles to help them divest these assets and captively redeploy back into new-economy real estate via ESR and Logos, the largest new-economy real estate platform in Asia-Pacific with over US$50bn of AUM.”
Jeffrey Shen and Stuart Gibson, ESR co-founders and co-CEOs, said: “This is an exciting time for ESR as we look forward to the promising future the combined platform is set to bring about.
“Post-transaction, the enlarged ESR Group will witness immediate growth in size, scale and offerings – as global investors seek to give more capital to increasingly fewer managers, we are uniquely positioned to capture an outsized share of that capital.
“Additionally, we have always believed in the growth of logistics and data-centre real estate and this transaction accelerates our vision considerably as our geographic reach will now extend across over 95% of GDP in Asia-Pacific.”
John Lim, ARA co-founder and deputy chairman, said: “For close to two decades, ARA has established itself as a leading real asset manager with a successful track record across geographies, asset classes and strategies through multiple market cycles.
“We look forward to partnering with the ESR team, whose expertise, dedication and vision have led to building the region’s leading logistics real estate platform, and we can now together provide investors with a full suite of products with an outsized contribution from new-economy real estate.”
Lim, together with a representative from each of CK Asset Holdings and Sumitomo Mitsui Banking Corporation, will be appointed to ESR’s board of directors.
SMBC will also subscribe to a US$250m placement of new ESR shares to reinforce its commitment to the enlarged ESR Group.
The senior management of ARA and LOGOS will join the enlarged ESR Group.