Bud Brewer Tries Asian IPO Again -- WSJ
September 18 2019 - 3:02AM
Dow Jones News
By Joanne Chiu and P.R. Venkat
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 18, 2019).
The world's largest brewer is taking a second shot at listing
its Asian business, seeking to raise as much as $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$4.85 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 as much as 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' $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 cornerstone investors, which 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 that this
sale goes 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 down just 1.6% for the
three months to Tuesday'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 that 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 show, 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 aims to
shrink to about US$80 billion.
JPMorgan Chase & Co., Morgan Stanley, Bank of America
Merrill Lynch and China International Capital Corp. are joint
global coordinators for the offering.
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 18, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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