AB InBev Pulled Off 2019’s Second Biggest IPO With Its $5 Billion Asian Unit Share Sale

Anheuser-Busch InBev NV has pulled off the year’s second-biggest initial public offering the second time around, raising about $5 billion in listing its Asian unit in Hong Kong two months after scrapping the original share sale.

A total of 1.45 billion Budweiser Brewing Company APAC Ltd. shares were priced at HK$27 each, which is the bottom of a marketed range with its top end set at HK$30, the company said in a statement on Tuesday. The company has partially exercised an upsize option, issuing 189 million shares on top of the initial base offering of 1.26 billion shares. The low-end pricing gives Budweiser Brewing an enterprise value of $45 billion.

The company also has an over-allotment option, which it could execute up to 30 days after listing, to sell as much as 217.8 million additional shares. If that option is fully exercised, the total funds raised for AB InBev will increase to $5.75 billion with the Belgian brewer controlling about 87% of Budweiser Brewing, it said.

The share sale would help AB InBev pare down its $100 billion-plus debt pile after its purchase of SABMiller in 2016 and accelerate its goal of creating a local champion in Asia, especially through acquisitions. The offering would also propel Hong Kong past Shanghai as the world’s No. 3 in terms of first-time share-sale volume, at a time when anti-government protests and U.S.-China trade tensions are rocking the market.

At $5 billion, the brewer’s listing would be the second-largest globally this year, trailing Uber Technologies Inc.’s $8.1 billion U.S. sale in May. Excluding Budweiser Brewing, companies have raised a total of $11.1 billion through IPOs in Hong Kong this year, according to data compiled by Bloomberg.

More Attractive

AB InBev has said all the proceeds from the share sale of its Asian unit will be used to repay debt.

“Whilst we believe the primary reason for the IPO is to accelerate deleveraging, it increases flexibility to do further deals,” Jefferies analysts Edward Mundy and Elsa Hannar wrote in a report. “ABI has traditionally done deals every four years and with synergies coming to an end post SABMiller, the market will refocus on the next M&A move.“

In July, AB InBev agreed to sell its Australian business to Asahi Group Holdings Ltd. for $11.3 billion, just a week after the Belgian brewer shelved a share sale in which it sought to raise as much as $9.8 billion.

The removal of AB InBev’s Australian unit, in hiving off a slower-growing part of its Asia-Pacific empire, has made the latest IPO plan more attractive to investors who balked at the previous deal’s valuation. Without Australia, the Asian unit’s revenue in 2018 was $6.7 billion, representing organic growth of 7.4%, the company said in its latest preliminary prospectus. In the earlier filing, the Asian unit including Australia had revenue of $8.5 billion, representing organic growth of 6.1%.

The offering has attracted GIC Pte. as a cornerstone investor with a commitment of about $1 billion. The company didn’t line up any cornerstone investor for its previous share sale.

Budweiser Brewing is expected to start trading on Sept. 30. JPMorgan Chase & Co. and Morgan Stanley are joint sponsors for the Hong Kong share sale.