AB InBev's Asia unit files for Hong Kong IPO as brewer seeks M&A deals

[HONG KONG] Anheuser-Busch InBev NV filed an application with the Hong Kong stock exchange for an initial public offering, as the world's largest brewer seeks to expand in the region's rapidly growing market for premium beer.

The brewer earlier this month confirmed it might sell a minority stake in its Asia-Pacific operations - a deal that could value the business at as much as US$70 billion - and list the shares on the Hong Kong Stock Exchange. JPMorgan and Morgan Stanley are the joint sponsors, according to a Hong Kong Stock Exchange filing on Friday.

The move would help AB InBev reduce its debt and pursue acquisition opportunities in a region that's driving growth for an otherwise stagnant business. 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, adding that the listing "could be a catalyst for our ability to explore such inorganic expansion opportunities."

The competition for Asian consumers - particularly in China - has been intensifying. Heineken this year set up a partnership with China Resources Beer Holdings Co, having bought a US$3.1 billion stake in China'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 A/S.

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 urbanization is driving consumption throughout the region. The unit posted a 31 per cent increase in net income last year to US$1.4 billion.

"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.

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