Asian logistics group E-Shang Redwood (ESR) has entered into exclusive talks with Viva Industrial Trust to create a SGD3bn (€1.85bn) industrial vehicle.
ESR, which is backed by private equity firm Warburg Pincus-backed, is proposing to merge its ESR-REIT with Singapore-listed peer Viva in a share swap deal.
Viva confirmed it had received a proposal for a merger from ESR Funds Management, adding that it had entered into discussions with ESR.
The exclusivity period will last three months, but details of the ESR offer have not been revealed.
Viva however cautioned that the confirmation was provided for information, and did not constitute a takeover offer.
Viva stock was trading at SGD90 cents each at the time of the announcement, giving it a market capitalisation of SGD909m.
At December 31, its industrial portfolio was valued at SGD1.27bn.
In its own announcement, ESR-Reit said its plan was to create the fourth largest S-REIT in Singapore, with a potential combined asset value of SGD3bn.
ESR in November broke off discussions with another Singapore–listed entity, Sabana Shariah Compliant Industrial REIT.
After buying a 5% stake in Sabana in March 2017, ESR had launched a takeover offer for Sabana in August.
Industry sources working with the parties in the current discussions told IPE Real Assets that taking over Viva might be easier for ESR than Sabana - because of the former’s shareholding structure.
A Chinese investor, Tong Jia Quan, holds 49.8% of Viva’s issued shares, with the next largest investor, the Tan family, owning 6.78% and the Hong Kong-listed asset management company, Value Partners, 3.4%
At this time last year, ESR acquired 80% in the manager of Cambridge Industrial Trust from National Australia Bank of Australia and the investment firm, Oxley Group.
The trust, which has a current market cap of SGD755m, was renamed ESR-REIT in July last year. ESR holds a stake of around 12% in ESR-Reit.
ESR, which has been expanding its business within Asia-Pacific and India, has, in quick succession, also raided the registers of two Australian listed trusts – Propertylink Group and Centuria Capital Group, giving it stakes of 18% and 14.9% respectively in these property groups.
Industry sources told IPE Real Assets that ESR considers Australia a crucial plank for its operations in this region.
It has recruited a former key executive of Goodman Group, previously based in Hong Kong, who is expected to relocate to Australia soon to drive ESR’s Australian expansion plans.