CUB owner AB InBev has decided not to proceed with the initial public offering of Budweiser Brewing Company APAC on the Hong Kong Stock Exchange.
The company said the decision was due to “several factors, including the prevailing market conditions.”
The IPO had been set to be world’s biggest listing of 2019. It’s also the third-largest withdrawn IPO on record, according to Dealogic.
AB InBev executives and bankers had told Bloomberg early last week that they already had enough investor demand just two days into their IPO roadshow.
But the Financial Times reports: “What Hong Kong investors found in Budweiser APAC was a standard, slightly flat beer group.
“One person close to the deal said the price tag was too high, given China’s economic slowdown. It was ‘wrong to blame the whole thing on market conditions’, the person said.”
AB InBev was seeking to raise between $US8.3 billion and $US9.8 billion through the partial sale of its APAC business on the Hong Kong stock exchange. It planned to offer 1.63 billion shares for between 40 and 47 Hong Kong dollars.
Budweiser Brewing Company APAC Limited is the largest beer company in Asia Pacific by retail sales value. The CUB owner produces, imports, markets, distributes and sells a portfolio of more than 50 beer brands, which it owns or has licensed, including Budweiser, Stella Artois and Corona, Hoegaarden, Cass, Great Northern, Harbin and Victoria Bitter. Its principal markets are China, Australia, South Korea, India and Vietnam.
According to Reuters, AB InBev was expected to use the proceeds to “reduce a debt pile of over $100 billion that was built up by its purchase of rival SABMiller in late 2016”.
IPOs on Hong Kong exchanges are only able to price up to 10% below the target range without regulatory approval if the risk is flagged in its prospectus.
This was not sufficiently highlighted in the Budweiser filing so AB InBev held firm on the HK$40 price, meaning some US investors trimmed the size of their orders, sources told CNBC.
AB InBev has reportedly said it remains open to another flotation and is keeping a close eye on the market.