Anheuser-Busch (AB) InBev priced the initial public offering (IPO) of its Budweiser unit at HK$27 per share on Tuesday, a figure that went below the expected range. However, analysts are still expecting the IPO to reach around $5 billion, or HK$39.2.
According to CNBC, market demand for the share has been high, prompting the company to announce the issuance of 189,354,000 more shares. The issuance for more shares will bring the total offering of 1.45 billion shares.
While the lower pricing may be a shock to some interested investors, analysts believe it is still a "fair deal" since AB InBev is now focused on China's premium beer market - a market that continues to see significant growth.
Research Director at Kingston Securities, Dickie Wong, noted that premium beer in China has been "outperforming everywhere," making the Budweiser stock a point of attraction these days.
If AB InBev reaches the expected $5 billion range, it would be the second-biggest IPO this year after Uber Technologies snagged the top spot in May, when it raked in a whopping $8.1 billion in its offering.
Aside from making a name for itself with the IPO, AB InBev's move is expected to help stabilize its debt issues. The company has a total debt load of $100 billion and industry experts believe the world's largest brewer may start breathing more easily with the IPO.
Reuters reported that this is AB InBev's second attempt to make a listing. The brewing giant already had plans to launch a bigger, more attractive IPO in July, stating that there were different factors that affected the delay.
The lower offering of Budweiser is also recognized by many market analysts as a good choice, given the current situation in Hong Kong, a slowing global economy, and ongoing trade disputes around the world.
Furthermore, the revived IPO does not include its Australian unit. Industry analysts said excluding Australia is another good move since the brewer can focus on growing or promising markets besides China. These include Vietnam and India.
A source with knowledge of the matter revealed that the Australian operations were "slow-growing," making the exclusion a more suitable move along with the low-end pricing that could be indicative of more potential upsides in the market.
Budweiser APAC will start trading on the Hong Kong Stock Exchange on September 30 with the code 1876. AB InBev boasts of over 50 beer brands including Corona, Stella Artois, Leffe, Hoegaarden, and more. The world's largest brewer is the result of a merger between Interbrew and AmBev, as well as the acquisition of Anheuser-Busch over a decade ago.
