Brewing giant InBev latest €8.6bn plan for shares sale

Brewing giant Anheuser-Busch InBev (AB) is seeking to raise up to $9.8bn (€8.6bn) by listing its Asia-Pacific business in Hong Kong, marking what would be the world’s largest initial public offering this year.

Budweiser Brewing Company Apac, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, is selling 1.6 billion primary shares at between HK$40 (€4.50) to KK$47 apiece, according to termsheets seen by Reuters.

The deal will raise between as much as $9.8bn (€8.6bn) for heavily-indebted AB before any over-allocation option is included, giving Budweiser Asia a market capitalisation of up to $63.7bn after the IPO. The world’s largest brewer has been working to reduce a debt pile of over $100bn following the purchase of rival SABMiller in late 2016.

The company has said the main merit of a Hong Kong listing would be to create a champion in the Asia-Pacific region, where sales are still growing and increasingly wealthy consumers are trading up to higher margin premium beers.

“In addition to paying down debt, the deal provides AB InBev with a platform for M&A whereby local brewers such as ThaiBev might prefer to tie up with a locally focussed player in an Asian currency,” said Nico von Stackelberg of broker Liberum.

Even at the low end of the price range, the IPO will be the biggest globally this year, outstripping the $8.1bn raised in New York by Uber. Global share listings hit their lowest level in three years in the first half of the year, with a slowdown in Europe counteracting a stronger US showing.

The IPO pricing values Budweiser Asia at 16-18 times its enterprise value to earnings, one termsheet shows. The deal will be a welcome boost to Hong Kong, which is lagging behind the New York Stock Exchange and Nasdaq in terms of IPOs this year, with $8.9bn to its credit compared with $14.9bn and $17.5bn n raised by its US rivals.

The biggest listing in the Asian financial hub so far in 2019 has been that of Chinese securities firm Shenwan Hongyuan which raised $1.2bn in April. The investor response to the offering will also act as a barometer for other large share sales in the near future, with Alibaba onsidering raising as much as $20bn through a listing in Hong Kong.

Budweiser Asia’s deal is expected to price in New York on July 11 and the stock will debut in Hong Kong on July 19, the term sheet showed.