AB InBev’s Asia-Pacific unit, which raised about $5 billion after relaunching its IPO this month, rose more than 6 per cent on its market debut in Hong Kong, easing concerns of the impact of ongoing anti-government protests on new share offerings.
Budweiser Brewing Company APAC Ltd’s initial public offering (IPO) was among a handful of recent floats seen as tests of investor sentiment amid protests that have roiled Hong Kong for nearly four months.
Hong Kong as well as other regional markets more generally are also on edge amid a trade dispute between the United States and China, as well as slowing global economic growth.
The Budweiser APAC IPO is the second-biggest globally so far this year, trailing only the $8.1 billion flotation of Uber Technologies Inc <UBER.N> in May, data from Refinitiv showed.
Anheuser-Busch InBev NV (AB InBev), the world’s largest brewer, relaunched the unit IPO this month after cancelling a plan for a bigger float in July citing “several factors, including the prevailing market conditions.”
Budweiser APAC shares rose as high as HK$28.90 on Monday, versus their IPO price of HK$27 apiece, the bottom of a marketed range. The stock closed the day at HK$28.20, up 4.4 per cent, while the market index gained 0.5 per cent.
“The performance is much better than expected, and it’s mainly helped by demand from institutional investors who are confident about the company’s growth story, mainly in China,” said Steven Leung, sales director at UOB Kay Hian in Hong Kong.
“You will now see more high-growth companies tapping the markets soon.”
The Budweiser debut came on a day when Hong Kong’s metro stations and roads reopened, after a chaotic weekend that saw police fire water cannon, tear gas and rubber bullets at protesters who set fires and threw petrol bombs.
The trigger for the protests was planned legislation, now withdrawn, that would have allowed people suspected of criminality to be sent to mainland China for trial, despite Hong Kong having its own much-respected independent judiciary.
The protests have broadened since they began more than three months ago into calls for universal suffrage.
“Obviously these are challenging times in Hong Kong, but we are very confident in the strong foundation here and we are very optimistic for the bright future of Hong Kong as one of the most important financial centres in Asia,” said Budweiser APAC Chief Executive Jan Craps at the listing ceremony.
Overall in the Asia-Pacific region, including Japan, equity capital market volume is down 25 per cent for the first nine-months of the year compared with the same period last year at $162.6 billion, with IPOs seeing their steepest on-year drop at 41.5 per cent, showed data from Refinitiv.
UPCOMING PUBLIC OFFERINGS
Despite the protests, IPO activity in Hong Kong has revived this month. Topsports International Holdings, the sportswear business of Chinese footwear retailer Belle International, last week launched an IPO of up to $1.2 billion.
Companies expected to launch Hong Kong IPOs within a month include logistics real estate developer ESR Cayman, which is expected to raise about $1 billion, and an over $1 billion float of Prague-based consumer lender Home Credit.
China’s biggest e-commerce company Alibaba Group Holding Ltd, however, last month delayed it's up to $15 billion listing in the city amid the political unrest.
More IPOs will be a boost for Hong Kong as a listings hub, with the city currently lagging its New York rivals.
Companies raised $15 billion in new listings in the Asian financial hub in the first nine months of this year – including that of Budweiser APAC – well short of the $42 billion raised in New York, according to Refinitiv data.
Proceeds from the IPO of Budweiser APAC, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, will help AB InBev reduce debt of over $100 billion accumulated following the purchase of rival SABMiller in late 2016.
The brewer also has another goal of creating an Asian champion to spur consolidation. Analysts see the brewing assets of Thai Beverage PCL or the Philippines’ San Miguel Corp as possible partners or targets.
JPMorgan and Morgan Stanley were the joint sponsors of the Budweiser IPO. They were also among the offering’s global co-ordinators with Bank of America Merrill Lynch and Chinese investment bank CICC.