AB InBev seeks $9.8 bln for Asia stake in world's largest 2019 IPO (updated)

Shenwan Hongyuan HK

02/07/2019 05:59

* IPO price range set at HK$40-HK$47 per share
    * Book closes on July 11, will debut in Hong Kong on July 19
    * IPO to give company market value of up to $63.7 billion
BREAKINGVIEWS-Budweiser serves up a pricey pint  urn:newsml:reuters.com:*:nL4N2430AZ   

 (Adds share price move, context)
    By Sumeet Chatterjee and Alun John
    HONG KONG, July 2 (Reuters) - Brewing giant Anheuser-Busch
InBev NV (AB InBev)  ABI.BR  is seeking to raise up to $9.8
billion by listing its Asia-Pacific business in Hong Kong,
marking what would be the world's largest initial public
offering this year.
    Budweiser Brewing Company APAC, whose portfolio of more than
50 beer brands includes Stella Artois and Corona, is selling 1.6
billion primary shares at between HK$40-$47 ($5.13-$6.02)
apiece, according to termsheets seen by Reuters. 
    The deal will raise between $8.3 billion and $9.8 billion
for heavily-indebted AB InBev before any over-allocation option
is included, giving Budweiser Asia a market capitalisation of up
to $63.7 billion after the IPO.
    The world's largest brewer has been working to reduce a debt
pile of over $100 billion following the purchase of rival
SABMiller in late 2016.
    The company has said the main merit of a Hong Kong listing
would be to create a champion in the Asia-Pacific region, where
sales are still growing and increasingly wealthy consumers are
trading up to higher margin premium beers.
    "In addition to paying down debt, the deal provides AB InBev
with a 'platform for M&A' whereby local brewers such as ThaiBev
might prefer to tie up with a locally focused player in an Asian
currency," said Nico von Stackelberg of Liberum.
    Shares in Belgium-based AB InBev traded 1.4% higher at 79.36
euros by 0925 GMT.
      
    WORLD'S BIGGEST
    Even at the low end of the price range, the IPO will be the
biggest globally this year, outstripping the $8.1 billion raised
in New York by Uber  UBER.N , data from Refinitiv shows. 
    Global share listings hit their lowest level in three years
in the first half of the year, with a slowdown in Europe
counteracting a stronger U.S. showing.  urn:newsml:reuters.com:*:nL8N23Y5U6
    The IPO pricing values Budweiser Asia at 16-18 times its
enterprise value (EV) to EBITDA (earnings before interest, tax,
depreciation and amortisation) ratio, one termsheet shows.
    EV-EBITDA is a common valuation metric that seeks to help
investors compare companies' operations and strip out the
different effects of financing costs. 
    Budweiser Asia's ratio compares with an EV-EBITDA value of
11 for AB InBev itself, according to Refinitiv data, 15 for
China-focused Tsingtao  0168.HK  and 10 for Japan's Kirin
 2503.T , another Asia-centric brewing giant.
    The deal will be a welcome boost to Hong Kong, which is
lagging behind the New York Stock Exchange and Nasdaq in terms
of IPOs this year, with $8.9 billion to its credit compared with
$14.9 billion and $17.5 billion raised by its U.S. rivals. 
    The biggest listing in the Asian financial hub so far in
2019 has been that of Chinese securities firm Shenwan Hongyuan
HK Ltd  0218.HK  which raised $1.2 billion in April.
    The investor response to the offering will also act as a
barometer for other large share sales in the near future, with
Alibaba Group Holding Ltd  BABA.N  considering raising as much
as $20 billion through a listing in Hong Kong.
    Budweiser Asia's deal is expected to price in New York on
July 11 and the stock will debut in Hong Kong on July 19, the
term sheet showed. 
    A spokeswoman for AB InBev declined to comment.
    JPMorgan  JPM.N  and Morgan Stanley  MS.N  are the joint
sponsors of the float. 
    Bank of America Merrill Lynch  BAC.N  and Deutsche Bank
 DBKGn.DE  are the joint global coordinators for the offering.  
  ($1 = 7.8015 Hong Kong dollars)

 (Reporting by Sumeet Chatterjee, Alun John and Julie Zhu;
Editing by Himani Sarkar and Keith Weir)
 ((sumeet.chatterjee@thomsonreuters.com; +852-2847 2094; Reuters
Messaging: sumeet.chatterjee.thomsonreuters.com@reuters.net))