BUD Anheuser Busch Inbev SA NV

By Joanne Chiu and P.R. Venkat 

The world's largest brewer is taking a second shot at listing its Asian business, seeking to raise up to US$7.6 billion in Hong Kong, even as the city reels from a summer of protests and from trade tensions between the U.S. and China.

The regional unit of brewing behemoth Anheuser-Busch InBev SA said on Tuesday it would begin taking orders the following day for its Hong Kong initial public offering, ahead of a planned listing on Sept. 30.

The unit, Budweiser Brewing Co. APAC, plans to raise a baseline 34 billion to 37.9 billion Hong Kong dollars (US$4.35 billion to US$4.84 billion) by selling new shares, at a market value of US$45.6 billion to US$50.7 billion. If demand is strong, AB InBev could boost the deal's size to as much as US$7.6 billion.

In July, AB InBev shelved an earlier attempt to list the business, after seeking to raise nearly US$10 billion, at a valuation of up to US$63.7 billion. It said market conditions were partly to blame, but some prospective investors and analysts pointed to its high valuation aspirations.

It is now marketing a smaller, faster-growing business that is more focused on China and other emerging markets, after selling its Australian unit--which had been part of the original listing plan--to Japan's Asahi Group Holdings Ltd. for US$11.3 billion.

"We are even more of a growth company than two months ago, when we were first here," Budweiser APAC Chief Executive Jan Craps told a news conference. "We believe now is the right moment to do the IPO."

The revised stock sale would be the world's second-largest IPO this year, after ride-hailing giant Uber Technologies' US$8.1 billion market debut in New York, according to Dealogic.

Unlike the last attempt, this time Budweiser APAC has secured a US$1 billion pledge from Singaporean sovereign-wealth fund GIC Pte. Ltd. to act as a cornerstone investor. Many Hong Kong listings use cornerstones, who invest wherever the deal prices, to help entice other prospective buyers.

Vincent Wen, an investment manager at KCG Securities Asia, said the addition of a prominent cornerstone could help ensure this sale went more smoothly.

Social unrest, the U.S.-China trade dispute and slowing Chinese growth are threatening to tip Hong Kong's economy into recession. Sometimes-violent protests have disrupted flights and road transport, denting the city's image as a safe location and an international financial hub. The benchmark Hang Seng stock index fell in late July and August, but has since rebounded somewhat, leaving it basically flat for the three months to Monday's close.

"We can't deny it's a volatile and challenging environment today, but we believe Hong Kong is still the best financial center in Asia for us to do the listing," Mr. Craps said.

Many issuers are testing investors' appetite in both the equity and bond markets in Hong Kong, such as China's Shanghai Henlius Biotech Inc.

The Budweiser APAC deal's price range equates to 33.8 to 37.5 times the earnings management estimates the business could make next year, according to a summary of terms seen by The Wall Street Journal.

That is broadly in line with Hong-Kong listed Chinese brewers China Resources Beer Holdings Co. and Tsingtao Brewery Co. They trade at nearly 40 and roughly 30 times forecast 2020 earnings, respectively, Refinitiv data shows, after sharp gains this year.

AB InBev brews one in four of the world's beers, and owns hundreds of brands including Budweiser, Stella Artois and Corona. But the deal-making saddled the brewer with debts, which it now aims to shrink to about US$80 billion.

JP Morgan, Morgan Stanley, Bank of America Merrill Lynch and CICC are joint global coordinators.

Julie Steinberg and Jing Yang contributed to this article.

Write to Joanne Chiu at joanne.chiu@wsj.com and P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

September 17, 2019 07:52 ET (11:52 GMT)

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