(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Anshuman Daga

SINGAPORE, Dec 13 (Reuters Breakingviews) - A group led by U.S. investors offered to privatise the Asian real estate fund manager for $7 billion. Hong Kong's dismal market and ESR's

complex business merit the move, yet its backers will find their options for an exit are narrow. That's no fault of the company. Asia is changed and there are limited options for regional groups with initial public offering dreams.

ESR's new owners may have other plans. They could revamp the firm, trim its asset-heavy portfolio and ultimately sell it to rivals or other buyout funds. Data from Bain shows that IPOs accounted for just 40% of the value of exits for private equity funds in Asia Pacific last year.

Yet, the option to fall back on public markets is a false illusion. Replicating an ESR-like listing in Asia today is hard to fathom. Hong Kong is no longer a desired venue for pan-Asian businesses: Skincare group L'Occitane went private this year and luggage maker Samsonite is considering listing its shares on a second exchange beyond the financial hub.

The Chinese economy's troubles and Beijing's tightening regulations have battered activity too. IPO volumes in Hong Kong are down some 80% so far this year from 2019 levels, per Dealogic. That has pushed Hong Kong behind India, China and Japan in regional rankings.

Overall, take-privates are gathering steam but exit options are bleak. Despite Hong Kong's troubles, no other Asian bourse is stepping up as a natural home for regional businesses. Singapore's stock market suffers from poor liquidity and has fallen off the radar for issuers. Activity in India is booming but it has a strong domestic flavour: South Korean companies like Hyundai are listing their fast-growing subsidiaries in the South Asian country.

It's unclear whether the outlook will improve over the coming years. A lot depends on China's economic strength, how the Sino-American relationship evolves, and the impact this has on equity markets. Beijing is pushing to shore up Hong Kong's status as an international financial hub. That might eventually lure back pan-Asian businesses. For now, those taking companies private won't be counting on an IPO as an off ramp.

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CONTEXT NEWS

A consortium of U.S. investors including Starwood Capital, Sixth Street, SSW Partners and Warburg Pincus has made a binding takeover offer that values Hong Kong-listed ESR Group at $7.1 billion, the target said on Dec. 4.

The offer price of HK$13 represents a 56% premium to ESR's undisturbed closing price from late April. The shares have plunged 60% from their peak of 2021.

(Editing by Una Galani and Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on anshuman.daga@thomsonreuters.com))