Investors are reluctant to fix the price of Budweiser's canceled list

As often, the price was the key. Several potential investors said the deal seemed expensive and said it was largely intended to reduce the parent company's debt.

In addition to that, the agreement has been made with investors the cornerstone that underlie most of Hong Kong's biggest fluctuations. This took place in the summer, when some institutions are understaffed. And it was simply important, especially for a market that was not traded as well as the United States this year. A representative of Budweiser APAC said there was no further comment after Friday's statement.

The company and its bankers, led by teams of

JP Morgan

Chase & Co.,

Morgan Stanley
,

Bank of America Merrill Lynch and

German Bank
AG

, began measuring investor interest in June, before officially taking orders on July 2.

Budweiser APAC met investors in Hong Kong, Singapore, Europe and the United States and held a press conference in Hong Kong on July 4 with managing director Jan Craps. Investors and journalists were offered a plush box containing bright red candies, marked Budweiser, including a hat and a beer glass.

But from the start, things did not seem very healthy. Unusually, it was not until several days later, on July 5, that a person familiar with the case said the transaction was covered, which means that the orders sold corresponded to the shares for sale. $ 3 to $ 9.8 billion.

If orders flow quickly, companies are generally eager to share it with the market, helping to create momentum. In this case, this slowness may have led buyers to think that demand was low, which led them to reduce their orders or demand a lower price, said a Hong Kong stock banker who was not not involved.

A portfolio manager from an institution said he met the company and the bankers several times before deciding not to buy. "It does not offer enough prospects for margin expansion and earnings growth to justify its valuation," said this person, pointing to a mix of developing and mature markets, from India to Australia.

Even the lowest tranche, HK $ 40 (US $ 5.11) per share, corresponded to a valuation premium of 72% over Carlsberg and 57% compared to Heineken, two major European rivals, according to estimates by Sanford C. Bernstein. The calculation is based on the value of the business in the form of a multiple of earnings before interest, taxes, depreciation and amortization.

Meanwhile, do without the cornerstone investor may have had the opposite effect. Hong Kong's principal IPOs are generally supported by these leading investors, who commit to buying a fixed amount of shares in dollars, regardless of price, and which are held for six months or more, making them help to approve them. According to Refinitiv, 14 of the top 20 IPOs in Hong Kong had cornerstones, averaging one-third of total transactions.

The cornerstones may be controversial, and here bankers have argued that their absence would mean better price discovery, more liquidity and better prospects for index inclusion.

On Thursday, investors were confident that the deal would be in the lower half of the range. There was then a silence, before it was removed late Friday.

While the IPO could have been achieved by setting a lower price range or selling fewer shares, the company resisted, said a person familiar with the offer on Friday. Finding many buyers for such a large contract can be a challenge, said this person, and

AB InBev

BUD -3.03%

missing the high growth figures offered by technology companies such as Alibaba.

This listing would have helped AB InBev reduce its indebtedness to more than $ 100 billion by the end of last year. However, CEO Carlos Brito said in May that the company could reach its debt reduction goals with or without the Asian IPO.

A fund manager for a European institution said that he had subscribed to the IPO, but at a lower level than the midpoint. He stated that he thought that the confidence in the management of AB InBev had been damaged, which could make it more difficult to return to the market.

-Corrie Driebusch contributed to this article.

Write to Joanne Chiu at [email protected] and P.R. Venkat at [email protected]