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AB InBev's Asia unit opens higher despite gloomy IPO market
[HONG KONG] The Asia-Pacific beer unit of Anheuser-Busch InBev NV gained as much as 2.2 per cent in its Hong Kong trading debut, in a rare bright spot for the dim global market in initial public offerings (IPO).
Budweiser Brewing Company APAC Ltd raised US$5 billion selling shares at the bottom of a price range last week, in the world's second-biggest IPO this year behind Uber Technologies Inc. That gave the Asian unit an enterprise value of US$45 billion, helping the parent company reduce its massive debt load and laying the groundwork for possible future acquisitions.
The shares rose to as much as HK$27.60 in Hong Kong, up from the offering price of HK$27. The benchmark Hang Seng Index was down as much as 0.7 per cent.
The result provides an encouraging conclusion to what's been a rocky IPO path for the Asia arm of the world's biggest beer company. Budweiser Brewing originally expected to storm into Hong Kong as a US$64 billion company, but the deal was shelved in July amid lacklustre demand. It was a high-profile setback that highlighted the growing disconnect between companies' lofty private valuations and investors' expectations, with would-be buyers sceptical of even well-known brands.
AB InBev revived the offering after selling its Australian operations to Japan's Asahi Group Holdings Ltd for about US$11 billion. That roughly halved the size of the Asia-Pacific offering, giving investors a more focused stake in faster-growing parts of the regional business, with brands like Cass in South Korea and Harbin in China.
The gains in Budweiser's trading debut may give some hope to a global IPO scene unsettled this year by volatile markets and geopolitical uncertainties. That's particularly the case for Hong Kong, which is facing twin pressures from anti-government protests that show no sign of abating and a trade war between the US and China.