AB InBev's Asia business jumps 5% on the first day of trading with Hong Kong

admin September 30, 2019

9 2 minutes read

AB InBev's Asia business jumps 5% on the first day of trading with Hong Kong

The Budweiser APAC share rose more than 5% on their first day of trading in what was the second-largest public offering of the year after Uber's $ 8.1 billion listing in May.

The brewer of Budweiser, Beck and Stella Artois opened for $ 27.4 Hong Kong ($ 3.50) a share, about 1.5% above its IPO price of 27 Hong Kong dollars ($ 3.44) a share before moving on to morning trading.

The IPO raised around $ 5 billion, which AB InBev ( BUD ) will use entirely to pay down debt.

The beer maker's public debut comes at a time when other highly anticipated IPOs have flopped. Shares in loss companies such as Uber ( UBER ) Peloton ( PTON ) and SmileDirectClub [1[ads1]9659008] ( ] SDC ) all fell on their first trading day. Uber fell 7%, Peloton threw 11% and SmileDirectClub, a direct seller of transparent harnesses, ended its first day on Wall Street with 27.5% of the IPO price.

Budweiser APAC did better and exploited the investor desire of established companies that make money. The brewer booked $ 959 million in net income in Asia last year.

Budweiser beer empire was built on debt. Now it runs to pay it

Budweiser APAC's IPO is a big win for the Hong Kong Stock Exchange ( HKXCY ) . The stock market has been hit by months of political crisis in the city, the ongoing US-China trade war and slowed China consumption. Its operator also had an unsolicited bid on the London Stock Exchange ( LDNXF ) . The Hang Seng index has fallen almost 9% over the past three months.

The listing excludes Budweiser APAC's Australia business, which the group sells to Japanese rival Asahi for $ 11.3 billion.

Relief of the Australian business, which was mature and experiencing slower growth, meant that the company was able to sell to investors in faster-growing markets in the Asia-Pacific region, such as China. AB InBev's sales in the country increased by 8.3% last year, with brands such as Budweiser and Corona performing particularly well.

Anheuser-Busch InBev drops yield when beer demands decline

AB InBev became the world's largest brewer by to borrow money to finance a number of acquisitions. Its most recent mega-acquisition, by SABMiller, increased the company's debt to $ 102.5 billion in 2018. It has already taken some steps to smooth the balance, including cutting its dividend to half last year.

AB InBev had originally planned to raise $ 9.8 billion from the listing in Hong Kong, which would make it the largest IPO to date this year. But the scrapped plan in July, cites market conditions, before it resumed the deal earlier this month.

Source link