AB InBev Tumble Following Cancelation Of Budweiser Hong Kong IPO

Budweiser Brewing Company APAC Ltd
Portfolio beer brands of Budweiser Brewing Company APAC Ltd are displayed during a news conference on the company's IPO in Hong Kong (Photo: Reuters / Andrew Geoffrey Jackson)

What would have been the biggest initial public offering (IPO) for 2019 has now been scrapped. Anheuser-Busch InBev, the company that makes the popular Budweiser beer brand, announced that it would not be pursuing its planned listing in Hong Kong.

The world's largest brewing company originally planned to list its Asia Pacific unit called the Budweiser Brewing Company APAC Ltd in Hong Kong to raise as much as $9.8 billion. The funds raised from selling its stocks were aimed at relieving some of the company's debts.

AB InBev currently has a standing debt of over $100 billion, a tab it has been growing since it purchased its rival SABMiller in 2016. Budweiser APAC is one of the biggest brewers in Asia with over 50 beer brands in its portfolio. Some of the more popular brands it distributes include Stella, Artois, and Corona.

Following the announcement that it is backing out of the planned listing, AB InBev stocks tumbled by as much as 3 percent in New York as investors retracted their initial hopes of a successful listing.

The cancelation of AB InBev's plan was also a big disappointment for the Hong Kong Stock Exchange, which would have greatly benefited from the major IPO. The Hong Kong bourse expected the listing to attract other high-profile listings from multinational companies.

The listing would have boosted the exchange's reputation as the go-to place for major companies, which is crucial given the current geopolitical climate.

Apart from AB InBev, other international companies that are considering an IPO in Hong Kong include UK-based data center Global Switch and consumer lending company Home Credit Group.

Aside from the Hong Kong exchange, the cancellation was also a big blow to the investment banks that led the planned IPO. JPMorgan and Morgan Stanley were the two main banks that would have led the IPO. Morgan Stanley is one of the biggest winners this year when it comes to revenues generated from fees of Asia Pacific IPOs.  

AB InBev's planned Budweiser IPO is the third-largest listing ever to be withdrawn from the Hong Kong bourse, right after Sociedad Estatal Loterias y Apuestas del Estado in 2011 and AIA Group in 2010.

In response to questions regarding its decision, AB InBev explained that there were "several factors" that had led it to cancel its planned listing.

The Belgium-based company explained that market conditions along with other factors led to the leadership's decision to cancel its plans. However, the company revealed that it was open to revisiting its IPO plans if the market conditions improve.

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