Why the King of Beers Just Had to Downsize its Big Asian IPO

As initial public offerings go, file this one under “Bud Light.”

Belgian brewing giant Anheuser-Busch InBev SA/NV, makers of Budweiser and Stella Artois, on Tuesday announced it plans to list its Asian business in Hong Kong with an IPO worth roughly $4.8 billion, a far more modest valuation than what it aimed to garner just two months prior. In July, it was forced to scrap a listing nearly twice as large.

The drinks conglomerate plans to sell 1.3 billion shares of Budweiser Brewing Company APAC at a price between HK$27-HK$30, or $3.45-$3.83. Even at the reduced price-tag, the listing would be the second largest flotation of the year, after Uber’s $8.1 billion IPO in the spring.

Shares of the AB InBev rose 1.14% Tuesday in Brussels, to close at 87.97 euros. In the U.S., the company climbed by 1.15% to $96.91 a share in mid-day trading.

“We are even more of a growth company than two months ago, when we were first here,” Jan Craps, CEO of Budweiser Brewing APAC, told a news conference in Hong Kong. “We believe now is the right moment to do the IPO.”

This summer the company had initially sought to raise about $10 billion, giving the Asian business a valuation of $63.7 billion. The company shelved the listing, citing poor market conditions as the primary reason. Analysts and investors, however, pointed at the high valuation for its failure.

This offering contains an “upsize” option, which would allow the company to sell up to 37% more shares if demand is particularly strong. If exercised at the top end of the price range, the brewing behemoth could generate a full $6.6 billion from the listing.

The Hong Kong listing was a bit of a surprise for IPO watchers. The city, once a hotbed for IPOs, has been embroiled in civil unrest for the past few months, making companies wary of investing there. China’s Alibaba Group Holdings delayed a $15 billion public offering last month because of the instability.

But AB InBev was undeterred. It has been looking to shed debt ever since its $100 billion acquisition of SABMiller in 2016. The acquisitive company views Asia as one of the quickest ways to reduce its debt, according to its prospectus, while also scoping out M&A opportunities in the region.

Felipe Dutra, CFO of AB InBev, said almost all the profits from its APAC unit in “fast-growing markets” would go toward paying down debt, during an earnings call in July.

AB InBev has been trying to make inroads into Asia for years. Its eyes were set on gaining a larger share of the Chinese market, the world’s largest, where it already controls 16%. The new valuation comes after AB InBev unloaded its Australian division for about $11.3 billion to Japan’s Asahi Group in the summer.

This time around, the company has secured a blue-chip investor in GIC PTE Ltd, the Singaporean sovereign-wealth fund, to help entice investors.