BUD Anheuser Busch Inbev SA NV

By Joanne Chiu 

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 24, 2019).

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 IPO at 27 Hong Kong dollars a share (US$3.45), the Belgium-listed brewer 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 Sept. 30.

In mid-July, Budweiser APAC called off an earlier IPO attempt -- with which it sought to raise nearly $10 billion -- because of 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 company Uber Technologies Inc.'s $8.1 billion debut in New York, according to Dealogic.

The total size could reach about $5.75 billion if a so-called greenshoe, or option to sell more stock after the shares start trading, is exercised in full.

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% over the past three months as the city reeled from a summer of sometimes violent protests and a 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 as much as $1.2 billion, according to a term sheet seen by The Wall Street Journal. Last week, a 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, which it could pay for in stock. It will also 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.

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 U.S.-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, 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.

--P.R. Venkat contributed to this article.

Write to Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

September 24, 2019 02:47 ET (06:47 GMT)

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