Brewing giant Anheuser-Busch InBev NV (AB InBev) is seeking to raise up to $9.8 billion (€8.7 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 (€7.34 billion) and $9.8 billion (€8.7 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 (€56.3 billion) after the IPO.
Reducing Debt Pile
The world's largest brewer has been working to reduce a debt pile of over $100 billion (€88.4 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 9:25 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 (€7.2 billion) raised in New York by Uber, 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 US showing.
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 and 10 for Japan's Kirin , another Asia-centric brewing giant.
A Welcome Boost
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 (€13.2 billion) and $17.5 billion (€15.5 billion) raised by its US rivals.
The biggest listing in the Asian financial hub so far in 2019 has been that of Chinese securities firm Shenwan Hongyuan HK Ltd which raised $1.2 billion (€1.1 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 considering raising as much as $20 billion (€17.7 billion) through a listing in Hong Kong.
Budweiser Asia's deal is expected to price in New York on 11 July and the stock will debut in Hong Kong on 19 July, the term sheet showed.
A spokeswoman for AB InBev declined to comment.
JPMorgan and Morgan Stanley are the joint sponsors of the float.
Bank of America Merrill Lynch and Deutsche Bank are the joint global coordinators for the offering.
