Capped and labelled bottles of Carling Black Label beer move along a conveyor belt on the production line at the SABMiller Plc Alrode brewery and bottling plant, a unit of Anheuser-Busch InBev NV, in Johannesburg, South Africa. (Photographer: Waldo Swiegers/Bloomberg)

AB InBev Is Said to Target July Listing in $5 Billion Asia IPO

(Bloomberg) -- Anheuser-Busch InBev NV is targeting a July listing for its Asia Pacific operations as it moves forward with an initial public offering that could raise at least $5 billion, people with knowledge of the matter said.

The Belgian brewer said Friday that it has applied to the Hong Kong stock exchange to sell shares in the unit, with JPMorgan Chase & Co. and Morgan Stanley leading the offering as joint sponsors. Bank of America Corp. and Deutsche Bank AG have also joined the deal as joint global coordinators, the people said, asking not to be identified because the information is private.

The move lands in a difficult week for markets as investors reel from the latest rise in U.S.-China trade tensions and Uber Technologies Inc. priced its IPO near the bottom end of the marketed range. It also signals that the Belgian brewer seeks to profit from Asia’s rapidly growing demand for premium beer.

Foreign Listings

“Our current expectation is to complete the process during the upcoming summer,” a representative for AB InBev said in an emailed response to Bloomberg, adding that the deal depends on valuation, market conditions and other factors. Representatives for Bank of America and Deutsche Bank declined to comment.

AB InBev shares rose as much as 2.2 percent in early Brussels trading Friday.

Friday’s filing didn’t provide details on the potential deal terms. The deal could be the biggest Hong Kong IPO from a company without mainland Chinese backing since 2010, when regional insurer AIA Group Ltd. completed a $20.4 billion share sale, according to data compiled by Bloomberg. Listings of foreign companies have been falling since 2011, when companies like Prada SpA accounted up about a fifth of funds raised in the city, the data show.

AB InBev could seek a valuation of $40 billion to $70 billion for the Asia operations, people familiar with the matter have said. The high end is not far off Uber’s $75.5 billion value after one of the year’s most ballyhooed IPOs.

Acquisition Hunt

The world’s largest brewer, which earlier this month confirmed that it was considering an Asia-Pacific IPO, is counting on the region’s growth potential to draw interest in the shares as the beer business faces stagnating prospects elsewhere. The unit had net income of $1.4 billion in 2018, up from $1.1 billion a year earlier, according to the preliminary prospectus.

The move would help AB InBev reduce its debt and pursue acquisition opportunities. The company has already cornered the premium market in China and has been buying up local craft beer brands to reach fashionable millennials with a taste for more expensive brews.

“We believe our business is an attractive platform to pursue select, potential M&A in Asia Pacific,” the company said in Friday’s filing, adding that the listing “could be a catalyst for our ability to explore such inorganic expansion opportunities.”

AB InBev Is Said to Target July Listing in $5 Billion Asia IPO

The competition for Asian consumers has been intensifying. Heineken NV this year set up a partnership with China Resources Beer Holdings Co., having bought a $3.1 billion stake in the country’s top beer maker. The Dutch company is challenging AB InBev’s position as the largest foreign brewer in the world’s biggest market, one that has also attracted Carlsberg A/S.

China’s beer business is still dominated by affordable domestic brands like China Resources’ Snow, a light brew whose label depicts a mountain climber hanging onto a cliff face. But costlier options like Heineken and AB InBev’s Budweiser are driving growth, with the market expected to expand by 21% to $106 billion in just four years.

AB InBev’s Asia unit also has strong positions in Australia, South Korea, India and Vietnam, and the company said urbanization is driving consumption throughout the region.

“We have a broad portfolio of over 50 brands and are well positioned to capture the beer consumption trends, including premiumization and trading up, across Asia Pacific,” AB InBev said in its filing.

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