Beer giant AB InBev kicks off US$9.8 billion IPO of Asian business in Hong Kong with roadshow
- Hong Kong public offering tranche of listing to be available between July 8 and July 11
- One-month Hibor jumps to its highest level since 2008, which could mean higher costs for retail and institutional investors
Budweiser Brewing, the largest beer maker in Asia-Pacific by volume, plans to raise up to US$9.8 billion in capital by selling 1.6 billion primary shares at between HK$40 and HK$47 apiece, according to its prospectus.
The Hong Kong public offering tranche of the listing, accounting for 5 per cent of the total shares, will go on the market on July 8 and close on July 11. The shares will debut on July 19.
In a rare move, the company did not introduce any cornerstone investors, usually large buyers that pledge to subscribe to a certain amount of shares. Introducing reputable cornerstone investors is a common way for companies and their sponsors to signal market confidence in the deal.
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The one-month Hong Kong interbank offered rate (Hibor), meanwhile, jumped to 2.7 per cent on Wednesday, its highest level since 2008. This could mean increased costs for retail and institutional investors as they prepare capital for the listing.
Investors who attended the roadshow on Wednesday said the deal was appealing because Budweiser has a good brand image and corporate governance, and also because of a strong rally in Hong Kong-listed beer stocks this year.
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“[Budweiser Brewing] has a strong brand and could expand very fast in the future,” said Steven Tse, senior equity research analyst at SBI China Capital, a Hong Kong-based brokerage and asset management firm.
Shares of Tsingtao Brewery and China Resources Beer Holdings, the two beer makers currently listed in Hong Kong, have risen by 59 per cent and 35 per cent, respectively, this year, riding on expectations that China’s demand for premium beer was increasing.
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This upbeat sentiment could offset Budweiser Brewing’s relatively high valuation level, Feng Chen, an analyst at Samsung Asset Management (Hong Kong), said.
The company’s business spans China, Australia, South Korea, India and Vietnam. It operates more than 50 beer brands, including Corona, Stella Artois, Harbin and Budweiser.
Its listing will eclipse Uber’s US$8.1 billion deal in May, the world’s largest flotation so far this year. It will also be the biggest IPO since Chinese e-commerce giant Alibaba Group Holding, which owns the South China Morning Post, listed in 2014.
After beating New York and Shanghai to become the world’s top listings destination last year, Hong Kong has witnessed a slowdown in IPOs in 2019. The city ranked third globally, with a total of HK$69.5 billion in funds raised through IPOs in the first half this year, trailing the New York Stock Exchange and the Nasdaq.
