The Asia-Pacific beer unit of Anheuser-Busch InBev NV gained as much as 7 percent in its Hong Kong trading debut, boosting the lackluster global market in initial public offerings (IPO) and vindicating the beermaker in its second attempt at an Asian listing.
Budweiser Brewing Co APAC Ltd raised US$5 billion selling shares at the bottom of a price range last week in the world’s second-biggest IPO this year behind Uber Technologies Inc. That gave the Asian unit an enterprise value of US$45 billion, helping the parent company reduce its massive debt load and laying the groundwork for possible acquisitions.
The shares rose to as high as HK$28.90 in Hong Kong trading yesterday from the offering price of HK$27. The benchmark Hang Seng Index increased 0.6 percent. Shares of the parent company slipped 0.4 percent in early Brussels trading, but they have risen 50 percent so far this year.
“We’ve seen very solid demand for our stock when we did the management roadshow,” Budweiser Brewing APAC chief executive officer Jan Craps told a briefing in Hong Kong yesterday. “We are confident there’s a strong foundation here.”
The result provides an encouraging conclusion to what has been a rocky IPO path for the Asia arm of the world’s biggest beer company. Budweiser Brewing originally expected to storm into Hong Kong as a US$64 billion company, but the deal was shelved in July amid lackluster demand. It was a high-profile setback that spotlighted the growing disconnect between companies’ lofty private valuations and investors’ expectations, with would-be buyers skeptical of even well-known brands.
Anheuser-Busch InBev revived the offering after selling its Australian operations to Japan’s Asahi Group Holdings Ltd for about US$11 billion. That roughly halved the size of the Asia-Pacific offering, giving investors a more focused stake in faster-growing parts of the regional business, with brands like Cass in South Korea and Harbin in China.
The gains in Budweiser’s trading debut might give some hope to a global IPO scene unsettled this year by volatile markets and geopolitical uncertainties. Multiple companies have halted their scheduled listings in Hong Kong, which is facing twin pressures from anti-government protests and a trade dispute between the US and China.
Budweiser’s launch helped propel Hong Kong past Shanghai as the world’s No. 3 market for IPOs this year. It might also shore up investor sentiment for upcoming IPOs that might include the lucrative secondary listing of Alibaba Group Holding Ltd (阿里巴巴).
“This IPO is quite different to many others that have faced headwinds recently,” Sanford C. Bernstein analyst Euan McLeish said. “BUD APAC is widely recognized as a high-quality company.”
“Strong earnings visibility” will drive continued investor interest, McLeish said.
The debut helped Anheuser-Busch InBev further trim its US$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.
Craps yesterday said that the company can create a lot of value with regional players in Vietnam, Thailand and Cambodia.
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