Anheuser-Busch InBev cancels its listing on ASI Stock Exchange

The withdrawal highlights a contradiction in the global market IPOs: if the United States is on fire, it is not the same for Asia or Europe, where the activity is in sharply lower due to concerns about economic growth and trade tensions with the United States.

AB InBev Friday said it would "closely monitor market conditions" while evaluating its options.

AB InBev shares fell sharply and traded Friday in the United States at $ 87.05, down 2.7% after falling nearly 5%.

According to Dealogic, this is the third largest IPO ever removed. It ranks behind the $ 10.1 billion attempt by the Spanish lottery giant Sociedad Estatal de Loterias and Apuestas del Estado SA in 2011 and the first attempt by insurer AIA Group to go public on the stock exchange. Hong Kong in 2009 as it sought to raise $ 10 billion.

The company may try to be listed again in Hong Kong or another exchange, although it will have to resubmit new registration documents with more up-to-date financial data.

AB InBev, which produces one in four beer sold worldwide, said the listing would allow it to enter into agreements in Asia and reduce its debt to more than $ 100 billion at the end. from last year after one of the acquisitions. The CEO, Carlos Brito, said in May that the company could reach its debt reduction goals with or without the Asian IPO.

For now, however, setting aside fundraising could make it more difficult for the unit to seek regional agreements and for the parent company to reduce its huge debt, which amounted to more than $ 100 billion. of dollars at the end of last year after a series of acquisitions.

Some investors and analysts said the demand was limited by the relatively high valuations sought by AB InBev. In addition, once the brewer disclosed a price range, he could not get out of the market, according to the rules of the Hong Kong market.

Alex Wong, director of the hedge fund Ample Capital, said his company had subscribed to the IPO, but that AB InBev might have overestimated investors' appetite for it. global economic uncertainty.

"This is valuable, but since debt reduction is AB InBev's main objective, it certainly would not want to sell the shares of the unit at a reasonable price," he said. .

Some bankers and investors have stated that the absence of key investors poses an additional challenge for the constitution of a book of business and the establishment of a price tag. 39, viable offer. Hong Kong's main IPOs are generally backed by key investors, who are big names such as sovereign wealth funds, large institutional investors, tycoons or state-owned enterprises.

They enter into an agreement by committing to purchase a fixed amount in dollars at an IPO, regardless of the level of the price band, and agreeing to hold the shares, usually for at least six months.

Budweiser Brewing Co. APAC Ltd. had originally planned to sell close to 1.63 billion new shares in an indicative range of 40 to 47 Hong Kong dollars ($ 5.11 to $ 6.01), valuing the unit at $ 63.7 billion. Even at the bottom of the range, or almost, it would be the biggest stock market debut in the world this year in the amount of money raised, eclipsing

Uber Technologies
Inc.

The sale of shares of $ 8.1 billion. The negotiation was scheduled to start on July 19th.

Euan McLeish, Senior Beverage Analyst for the Asia Pacific Region at Sanford C. Bernstein, said the fair value of the security was $ 42.50 per share, given its quality assets and footprint. diversified regional However, this price represents a business value equal to 19.3 times earnings before interest, taxes, depreciation and amortization over the next 12 months – an expensive premium of 65% compared to the average of global brewers.

The development could be a bad omen for Hong Kong's upcoming major stock sales, such as

Alibaba Group Holding
Ltd.

The potential for inclusion in the city later this year.

This year has already been disappointing for new problems in Asia and Europe. Excluding Japan, US $ 28.1 billion has been collected so far in 2019 in Asia, down 33 percent from the same period last year, according to Dealogic. European activity is down 59%. Earlier this week, insurer Swiss Re AG suspended the London listing of a UK company due to weak investor demand.

In contrast, according to Dealogic, funds raised in IPOs so far this year have increased by 37%, while public investors are demanding shares of fast-growing technology start-ups such as

Pinterest
Inc.

and

Slack Technologies
Inc.

While the IPO of AB InBev could have been achieved by setting a lower price range or by selling fewer shares, the company resisted, according to a person familiar with the company. offer. It can be difficult to find many buyers for such a large market, said the person, and AB InBev did not have the high growth figures proposed by technology companies such as Alibaba, which had raised $ 25 billion dollars during its IPO in 2014.

JP Morgan

Chase & Co. and

Morgan Stanley

were the promoters of the AB InBev agreement, the most important role of banks in an IPO in Hong Kong. They were also world coordinators and bookkeepers with Bank of America Merrill Lynch and

German Bank
AG

.

AB InBev struggled to reduce debt by facing challenging emerging markets and declining beer consumption in key regions. Last year, the brewer halved its dividend, dropping its share price.

These problems weighed on the company's results, but in May, the company announced better than expected results, thanks to the diversification of its activities.

Write to Joanne Chiu at [email protected], Jennifer Maloney at [email protected] and Corrie Driebusch at [email protected]