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Real estate

SK sells 4.6% in Asian logistics property developer ESR for $408 million

Sep 17, 2020 (Gmt+09:00)

South Korea’s SK Corp. has sold part of its stake in ESR Cayman Ltd., an Asian logistics real estate developer, for 480 billion won ($408 million) as it moves to secure funds for other areas of growth.

The mainstay of the SK Group, the country’s third-largest conglomerate, said on Sept. 17 that it sold 140 million shares or 4.6% of ESR for HK$22.5 per share in a block deal. The Korean oil refiner bought a total of 11% in the logistics property developer for about 490 billion won in 2017.

ESR, short for e-Shang Redwood, is one of the largest warehousing developers, owners and managers in Asia. It was formed by a merger of Shanghai-based warehousing services firm e-Shang and Singaporean logistics real estate investment firm, the Redwood Group, in 2016. The company operates about 270 logistics facilities around the world, serving more than 200 clients, including Amazon, Alibaba and SK Corp. was the second-largest shareholder when it bought the 11% stake in 2017.

SK Group headquarters in downtown Seoul
SK Group headquarters in downtown Seoul

SK’s investment in ESR paid off in November last year when ESR went public on the Hong Kong stock exchange. ESR was trading at HK$24.75 per share on Wednesday, up 47% from its IPO price. Given the uptrend in ESR’s share prices, analysts say SK will likely see a windfall gain should it unload its remaining stake in the logistics property developer.

SK plans to use the proceeds from the 4.6% stake sale to nurture new areas of growth, such as biopharmaceuticals, semiconductors, rechargeable batteries, big data and artificial intelligence. It has already been investing heavily in those areas with money raised from the IPO of SK Biopharmaceuticals Co. and dividends from SK E&S Co., a gas and energy unit of the SK Group.

As an “investment holding company,” SK Corp. has been aggressively seeking global investment opportunities since CEO Jang Dong-hyun took the helm in 2017.

Last month, SK Corp. invested $300 million in Chinese data center operator ChinData Group to benefit from growing global demand among enterprises for cloud services.

By Kyung-Min Kang

In-Soo Nam edited this article

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