HONG KONG – The Asia business of the world’s largest brewer raised about $5 billion in its second attempt at a Hong Kong initial public offering, just months after it called off a much bigger share sale.
Anheuser-Busch InBev SA’s Asian unit, Budweiser Brewing Co. APAC, priced its Hong Kong IPO at HK$27 a share (US$3.45), people familiar with the matter said Tuesday. That was at the low end of an indicative price range.
The deal gives Budweiser APAC a market capitalization of more than $45 billion, making it at a stroke one of the world’s largest listed brewers with a market value far in excess of Japan’s Asahi Group Holdings Ltd., Denmark’s Carlsberg A/S or local rival China Resources Beer (Holdings) Co. The shares start trading on Sept. 30.
In mid-July, Budweiser APAC called off an earlier IPO attempt–with which it sought to raise nearly $10 billion–due to a lukewarm investor response. It then sold its Australian unit and returned to the market as a smaller and faster-growing company that derives most of its sales from China, South Korea, India and Vietnam.
Its $5 billion share sale still ranks as Hong Kong’s largest IPO this year and is the second-largest offering world-wide in 2019 after ride-hailing giant Uber Technologies’ $8.1 billion debut in New York, according to Dealogic.
AB InBev went ahead with its IPO despite difficult market conditions. As of Monday’s close in Hong Kong, the benchmark Hang Seng Index was down 8 percent over the past three months as the city reeled from a summer of sometimes violent protests and a -China trade war.
New share sales in Hong Kong are gradually picking up. On Tuesday, Chinese sportswear retailer Topsports International Holdings Ltd. launched an IPO of up to $1.2 billion, according to a term sheet seen by The Wall Street Journal. And last week, a pre-revenue Chinese biotechnology company, Shanghai Henlius Biotech Inc., raised $409 million in an IPO that also priced at the bottom of an indicative range.
The Budweiser APAC share sale could enable the Asian business to pursue regional deals and will help parent AB InBev reduce its huge debt pile, which was accumulated through years of aggressive deal making. AB InBev brews one in four of the world’s beers and owns hundreds of brands, including Budweiser, Stella Artois and Corona. It is aiming to reduce its debt to about $80 billion.
Unlike its July attempt, Budweiser APAC this time brought in a cornerstone investor, Singaporean sovereign-wealth fund GIC Pte. Ltd., which agreed to buy $1 billion of its shares. High-profile backers are common features in Hong Kong IPOs.
Andrew Zhou, senior investment manager in the asset management division of Evergrande Securities (Hong Kong) Ltd., said his funds in July subscribed to Budweiser’s IPO but decided not to join this time around. He said the stock’s valuation looked unappealing, given the business’s modest growth outlook and uncertainties stemming from -China trade friction.
Sanford C. Bernstein analyst Euan McLeish estimated Budweiser APAC has a price-to-earnings multiple of 37.6 times for 2020, slightly less than the valuation of China’s biggest brewer, China Resources Beer (Holdings), whose stock has already had a run higher this year.
Budweiser APAC shares are also more expensive than smaller Chinese rival Tsingtao Brewery Co. and their price-to-earnings multiple is nearly double that of parent AB InBev’s stock.
JPMorgan Chase & Co., Morgan Stanley, Bank of America Merrill Lynch and China International Capital Corp. served as joint global coordinators for the offering.