Anheuser-Busch InBev has priced the revived initial public offering of its Asia-Pacific business at the lower end of the projected range, raising $5bn from the sale of shares in the division — far less than it had hoped to raise when it tried to list the unit in July.
The world’s largest brewer initially sought to raise closer to $10bn from listing on the Hong Kong stock exchange, but shelved its IPO plans two months ago after investors were put off by the price.
AB InBev last week set an indicative price range of HK$27-HK$30 per share, and said on Tuesday that it had priced the stock at the bottom end of that range.
The IPO included an upsize option, which increased the offering from $4.3bn to $5bn. A separate overallotment option, or “greenshoe”, which AB InBev can execute up to 30 days after listing, could further increase the deal size to $5.75bn if fully exercised, the company said.
Though shy of the size initially sought, the share sale is still the world’s second-biggest this year, after Uber raised $8.1bn in May.
The IPO values AB InBev’s Asia-Pacific business at an enterprise value of HK$351.8bn ($45bn) or 33 times projected 2020 earnings. In comparison, China’s biggest brewer CR Beer trades at 38 times 2020 earnings.
The revival of the listing is a boon for Hong Kong’s stock market, where activity has dwindled this year due to the US-China trade war and the political unrest rattling the territory.
From the start of the year to September 20, funds raised via IPOs in Hong Kong totalled $10.7bn, just a third of the amount in the same period in 2018, according to data from Dealogic.
The pricing at HK$27 came despite the presence of Singapore sovereign wealth fund GIC as a cornerstone investor, and AB InBev’s $11bn sale in July of the Asia unit’s slower-growing Australian business to Japanese brewer Asahi.
A cornerstone investor is a common feature of Hong Kong listings involving a shareholder subscribing to a large chunk of shares in advance subject to a lock-up period.
GIC agreed to buy $1bn worth of shares and hold the stock for at least six months, according to Budweiser APAC.
The IPO, on which JPMorgan Chase and Morgan Stanley were co-sponsors, will help to reduce an AB InBev’s debt pile that exceeded $100bn following a spate of acquisitions culminating in the 2016 takeover of SABMiller for £79bn.
The disposal of the Australian business and the revival of the Budweiser APAC listing have helped ease investor concerns about the company’s debt. Shares in ABI are up 52 per cent year to date, while the MSCI Europe consumer staples index is up 18 per cent over the same period.
According to polling by research house Bernstein, the majority of respondents expect Budweiser APAC to trade at a modest premium to peers post-IPO. Shares are set to begin trading in Hong Kong on September 30.
Asia is an important growth market for AB InBev, whose market share has shrunk in the US, where it owns key brands including Bud Light and Budweiser. The company owns about 50 beer brands, among them Stella Artois, Becks and Corona.