APAC real estate giant ESR could be taken private and acquired in a deal valuing the company at HK$55.2 billion (US$7.11 billion).

Traditionally focused on logistics and commercial real estate, the company has been expanding into data centers in recent years. It is set to be acquired by a consortium with a range of data center investments.

A consortium comprised of Starwood Capital Group, Sixth Street, SSW Partners, the Qatar Investment Authority, Warburg Pincus, and ESR’s founders this week collectively put forward to acquire ESR, which is currently listed on the Hong Kong Stock Exchange. The consortium would wholly own ESR after the closing of the deal.

ESR has traditionally been focused on logistics real estate and claims to be the largest logistics real estate company in APAC. The company has made a number of investments in the data center space since 2021; it has 575MW of committed data center sites in key markets across APAC, with a pipeline of more than 2GW worth of land and projects.

Formed in 2016 following a merger between e-shang and Redwood Group, ESR has data projects in development across Japan, Hong Kong, Malaysia, South Korea, and Australia. ESR subsidiary ARA Asset Management also has a data center footprint through its Logos Group unit, which partnered with Pure Data Centres for a 20MW facility in Indonesia.

The consortium, along with the founders of the company, collectively hold 39.9 percent of ESR’s existing shares. The consortium has also received co-investment equity commitments from “highly reputable institutional investors,” who will be investing through both Starwood Capital and Warburg Pincus-managed vehicles, including Alpha Wave Global and an Asia public pension investor.

“A strategic transformation is required to realize the company’s platform value,” the consortium said. “To effectuate this transformation, the company needs to transition to an asset-light platform, re-focus on new economy sectors, simplify its current portfolio with non-core asset divestitures, realize cost synergies, and optimize its balance sheet.”

“The proposal, if successful, would transform the company’s shareholder register to include highly experienced world-class investors whose long-term capital will support the company’s strategic transformation and growth, while maintaining a prudent and effective governance structure that protects minority shareholders.”

Private investment firm Starwood is developing a number of data centers in the US and owns a significant stake in European developer Echelon. This year it launched a dedicated data center unit, and significant portions of its newest fund will reportedly go to data centers.

Sixth Street was established in 2009 as a strategic partnership with TPG. The firm has $80 billion in assets under management and committed capital and has investments across software, life sciences, sports, finance, digital infrastructure, real estate, energy, and agriculture. It previously invested in AirTrunk prior to its 2020 acquisition by Macquarie and this year became a minority investor in EdgeConneX.

Private equity giant Warburg Pincus has a number of existing data center investments. The company has previously formed a joint venture with 21Vianet (now Vnet) in China; it also formed APAC developer Princeton Digital Group (PDG); and invested in Singapore-based Evolution Data Centres.

Founded in 2005, sovereign wealth fund the Qatar Investment Authority has previously said it was looking to expand beyond traditional real estate into data centers and warehouses.

New York-based investment firm SSW Partners was founded in 2021. It has previously invested in car technology firm Veoneer.

Morgan Stanley Asia Limited and Deutsche Bank AG, Hong Kong Branch are acting as co-lead financial advisers, with Morgan Stanley also acting as the sole structuring advisor to the consortium. Goldman Sachs and UBS are acting as joint financial advisers to the consortium and United Overseas Bank Limited is acting as capital structure advisor to the consortium. Latham & Watkins LLP and Kirkland & Ellis are acting as legal counsels to the consortium. JLL is acting as the real estate advisor to the Consortium. Citigroup Global Markets Asia Limited is acting as the exclusive financial adviser to the ESR and Freshfields Bruckhaus Deringer is acting as legal counsel to the company.