AB InBev Raises $5 Billion in Asian Unit’s Hong Kong IPO
Budweiser shares priced at HK$27, bottom of marketed range.
(Bloomberg) -- Anheuser-Busch InBev NV has pulled off one of the year’s biggest initial public offerings the second time around, raising about $5 billion by listing its Asian unit in Hong Kong two months after scrapping the original share sale.
The Belgian brewer priced shares of Budweiser Brewing Company APAC Ltd. at HK$27 each, the bottom of a marketed range. Still, the sale gives the Asian unit an enterprise value of $45 billion, helping the parent company reduce its massive debt and laying the groundwork for possible future acquisitions.
The world’s biggest beer company succeeded on its second try after selling Budweiser Brewing’s Australian unit to Japan’s Asahi Group Holdings Ltd. That roughly halved the size of the Asia-Pacific offering but gives investors in the IPO a more focused stake in faster-growing parts of the regional business, with brands like Cass in South Korea and Harbin in China.
The deal’s revival is a boost for the Hong Kong stock exchange at a time when anti-China protests have rocked the market. The sale will propel Hong Kong past Shanghai as the world’s No. 3 market for initial public offerings this year.
AB InBev traded 0.7% lower early Tuesday in Brussels. The stock is still up by half this year.
Even after investors balked at the previous offering’s valuation, the new listing would be the second-largest globally this year, trailing Uber Technologies Inc.’s $8.1 billion U.S. sale in May. Excluding Budweiser Brewing, companies have raised a total of $11.1 billion through IPOs in Hong Kong this year, according to data compiled by Bloomberg.
The share sale helps AB InBev pare down its $100 billion-plus debt pile after its purchase of SABMiller in 2016, letting it accelerate its goal of creating a regional champion in Asia, especially through acquisitions. The company has said all the proceeds will be used to reduce borrowing.
“Whilst we believe the primary reason for the IPO is to accelerate deleveraging, it increases flexibility to do further deals,” Jefferies analysts Edward Mundy and Elsa Hannar wrote in a report. “ABI has traditionally done deals every four years and with synergies coming to an end post-SABMiller, the market will refocus on the next M&A move.”
Bottom of Range
While the company priced the offering at the bottom end of a range whose ceiling was HK$30, it partially exercised a right to increase the number of shares sold, bringing the total to 1.45 billion. There’s a further option to increase that within 30 days after listing, lifting the amount raised to as much as $5.75 billion. The Belgian company will retain control of the Asian business.
The sale of the Australian unit to Asahi lopped off about one-fifth of the Asia-Pacific unit, cutting its annual sales to about $6.7 billion, according to the latest preliminary prospectus. But the deal increased Budweiser Brewing’s 2018 growth rate by more than a percentage point, to 7.4%, by removing operations in a more mature market.
The IPO price values Budweiser Brewing at 17 times its forecast 2020 enterprise value to earnings before interest, taxes, depreciation and amortization. That’s slightly less expensive than rival China Resources Beer Holdings Co., which is trading at 18.8 times and is one of the highest valued among Asian brewers. Tsingtao Brewery Co. is trading at 13.5 times its forecast 2020 EV/EBITDA, while Thai Beverage Pcl is at 17 times.
Budweiser Brewing’s offering has attracted GIC Pte. as a cornerstone investor with a commitment of about $1 billion. The company didn’t line up any cornerstone investor for its previous share sale.
Budweiser Brewing is expected to start trading on Sept. 30. JPMorgan Chase & Co. and Morgan Stanley are joint sponsors for the Hong Kong share sale.
--With assistance from Albertina Torsoli.
To contact the reporters on this story: Julia Fioretti in Hong Kong at jfioretti4@bloomberg.net;Carol Zhong in Hong Kong at yzhong71@bloomberg.net
To contact the editors responsible for this story: Fion Li at fli59@bloomberg.net, ;Lianting Tu at ltu4@bloomberg.net, Eric Pfanner
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