Belgian brewer AB InBev prepares for Hong Kong IPO in July, plans to raise up to US$5 billion
- Anheuser-Busch InBev, the maker of Budweiser beer, on Friday submitted an application to the Hong Kong stock exchange to sell shares in its Asia-Pacific operations
- Deal could be the biggest Hong Kong IPO from a company without mainland Chinese backing since 2010
Anheuser-Busch InBev is targeting a July listing for its Asia-Pacific operations as it moves forward with an initial public offering that could raise at least US$5 billion, people with knowledge of the matter said.
The Belgian brewer has submitted an application to the Hong Kong stock exchange to sell shares in the unit, according to a filing posted to the bourse’s website on Friday. JPMorgan Chase and Morgan Stanley are leading the offering as joint sponsors, a preliminary prospectus shows.
Bank of America and Deutsche Bank have also joined the deal as joint global coordinators, the people said, asking not to be identified because the information is private. Friday’s filing did not provide details on the potential deal terms.
The move lands in a difficult week for markets as investors reel from the latest rise in US-China trade tensions and Uber Technologies priced its IPO near the bottom end of the marketed range. It also signals that the brewer seeks to profit from Asia’s rapidly growing demand for premium beer.
“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 per cent in early Brussels trading on Friday.
The deal could be the biggest Hong Kong IPO from a company without mainland Chinese backing since 2010, when regional insurer AIA Group completed a US$20.4 billion share sale, according to data compiled by Bloomberg. Listings of foreign companies have been falling since 2011, when companies like Prada accounted up about a fifth of funds raised in the city, the data show.
AB InBev could seek a valuation of US$40 billion to US$70 billion for the Asia operations, people familiar with the matter have said. The high end is not far off Uber’s US$75.5 billion value after one of the year’s most ballyhooed IPOs.
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 US$1.4 billion in 2018, up from US$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.”
The competition for Asian consumers has been intensifying. Heineken this year set up a partnership with China Resources Beer Holdings, having bought a US$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.
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 per cent to US$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 urbanisation 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 premiumisation and trading up, across Asia-Pacific,” AB InBev said in its filing.
