AB InBev Seeks to Raise Cash from Asia Business Unit

Anheuser-Busch InBev (AB InBev) said on Friday that it has applied to the Hong Kong stock exchange to sell shares in its Asia business unit known as Budweiser Brewing Company APAC.
The world’s largest brewing company is looking to sell 15% of its Asia unit to investors to raise about $5bn to $6bn dollars in an Initial Public Offering (IPO), according to sources close to the deal.

According to analysts at Jeffries, an investment banking firm, AB InBev’s Asia Pacific unit is worth about $40bn, meaning the company is likely to raise $6bn through the share sale. However, one source close to the deal said that the company was aiming for a higher valuation of as much as $65bn meaning that it could raise up to $10bn.
AB InBev Asia unit earned $1.4bn on revenue of $8.5bn in 2018, up from $1.1bn in 2017.
The unit brews, imports and markets over 50 brands of beers including some of its premium brands such as Budweiser, Stella Artois, Corona and Hoegaarden.

The brewer hopes to use the funds raised to pare down part of its $102.5bn debt from its acquisition of SABMiller in 2016. The company’s shares dropped 40% in 2018 driven in large part by concerns that the debt was weighing down its performance.
But investors have since come back to embrace the company from the beginning of the year driving a 30% share gain.

The move would also help the company pursue acquisition opportunities in the region. The company’s brands already dominate the premium beer market in China, with strong positions in Australia, South Korea, India and Vietnam. The company notes that urbanization is raising consumption levels in the region.
“We believe our business is an attractive platform to pursue select, potential M&A in Asia Pacific,” the company said in Friday’s filing.”
The company is hoping to finalise the listing by July.

“Our current expectation is to complete the process during the upcoming summer,” a spokesperson for AB InBev said, adding that the deal depends on valuation, market conditions and other factors.”
“We have a broad portfolio of over 50 brands and are well positioned to capture the beer consumption trends, including premiumization and trading up, across Asia Pacific,” AB InBev said in its filing.

May 11, 2019