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Anheuser-Busch InBev, which produces Budweiser and Bud Light, canceled what would probably have been the biggest IPO of 2019 in deciding not to publicize the unity unit of its Asia unit.
Shares of the beverage company closed more than 3% Friday on news.
The company was seeking to raise up to $ 9.8 billion in a public listing of Budweiser Asia, according to Reuters. This would be the largest IPO since Uber raised $ 8.1 billion when it was listed in May, had it started trading on July 19 as previously planned.
AB InBev said the agreement would allow it to expand in Asia. The withdrawal of the IPO plan suggests that while the IPO market in the US is at a record year, other regions are falling behind. Asia has been particularly affected by fears of a slowdown in global growth and trade tensions between the United States and China.
The company announced on Friday that it would "closely monitor market conditions" for its upcoming move.
Analysts who cover the company said that AB InBev was struggling to adhere to Hong Kong's stringent public listing rules, the Wall Street Journal reported. The company did not have a key investor, such as a sovereign wealth fund, a large institutional investor, a local mogul or a state-owned company, to approve the deal.
The asking price may also have been too high for investors. Once AB InBev has defined a price range, it can not deviate from this range in accordance with Hong Kong rules. The company could have continued its IPO if it set a lower price range or offered fewer shares, but the company resisted, according to the Wall Street Journal.
The IPO would have helped the company repay its debt. Carlos Brito, the elusive CEO, said in May that the company would reach its debt reduction goals with or without the IPO in Asia. But without the IPO, it will certainly be more difficult and may mean that the company will have to wait for other contracts in progress.
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