AB InBev Asia unit raises $5 billion in world's second-largest 2019 IPO

By Julie Zhu

HONG KONG (Reuters) - AB InBev raised about $5 billion in a Hong Kong IPO of the brewer's Asia-Pacific unit after pricing it at the bottom of a marketed range, as investors backed a deal seen as offering value despite the city being hit by anti-government protests.

The IPO of the unit of Anheuser-Busch InBev NV (AB InBev), the world's largest brewer, is the second-biggest globally so far this year, trailing only the $8.1 billion flotation of Uber Technologies Inc in May, data from Refinitiv showed.

AB InBev had canceled a plan for a bigger initial public offering (IPO) of the unit in July that could have raised as much as $9.8 billion, citing "several factors, including the prevailing market conditions".

Separately, Topsports International Holdings, the sportswear business of Chinese footwear retailer Belle International, launched on Tuesday a Hong Kong IPO of up to $1.2 billion, as per a marketing term sheet seen by Reuters.

The AB InBev and Topsports offerings are among a handful of recent sizeable IPOs seen as tests of investor sentiment following protests that have roiled Hong Kong for nearly four months and weighed on its stock market.

Markets more generally are also on edge amid a trade dispute between the United States and China, as well as slowing global growth.

AB InBev said in a statement on Tuesday the IPO of Budweiser Brewing Company APAC Ltd was priced at HK$ 27 ($3.44) per share, the bottom end of the HK$27 to HK$30 indicative range, confirming what sources had earlier told Reuters.

The IPO included a rare "upsize" option that enabled the Belgium-based brewer to sell up to 36.8% more shares in the offering. That option was partially exercised, it said.

AB InBev's revived IPO excludes its Australian operations, which it agreed to sell to Japan's Asahi Group for $11 billion shortly after the previous IPO was shelved.

Without Australia, a large but mature market, AB InBev's Asia-Pacific operations would be more focused on faster growth markets such as China, India and Vietnam, which has made the IPO an easier sell, sources have said.

"The company has top-notch assets and without the slow-growing Australian operations the deal has become more attractive than last time," said one source with knowledge of the Budweiser IPO.

"And today's low end pricing would give the stock more upside potential in the public market."


The IPO pricing comes as Hong Kong leader Carrie Lam said on Tuesday that she hoped peaceful and rational dialogue will help find a way out of the protests gripping the former British colony.

At HK$27 per share, Budweiser will have a market value of $45.6 billion.

The public offering of Budweiser, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, will also provide a much needed boost for IPO activity in Hong Kong, which is lagging behind its New York rivals. Companies have raised $10.8 billion in new listings in Hong Kong as of mid-September, well short of the $41 billion raised in New York, according to Refinitiv data.

Proceeds from the IPO will help AB InBev reduce debt of over $100 billion accumulated following the purchase of rival SABMiller in late 2016. The stock of Budweiser will debut on Sept. 30.

The beer maker also has another goal - creating an Asian champion to spur consolidation. Analysts see the brewing assets of privately held San Miguel of the Philippines or of ThaiBev as possible partners or targets. JPMorgan and Morgan Stanley are the joint sponsors of the flotation. Bank of America Merrill Lynch and Chinese investment bank CICC are the global coordinators for the offering.

(Reporting by Julie Zhu; Writing by Sumeet Chatterjee; Editing by Christopher Cushing and Muralikumar Anantharaman)

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