Budweiser fails to price its IPO as scheduled; share must price by Monday, brokers say
- Budweiser will need to price its Hong Kong shares by Monday to achieve a successful listing on July 19
- Listing could raise up to US$9.8 billion in Hong Kong, surpassing Uber, which raised US$8.1 billion in New York in May, as the largest IPO this year
Budweiser Brewing Company APAC has failed to price its Hong Kong initial public offering, as what could potentially be the world’s largest IPO this year runs flat with investors while bankers and the company failed to reach a consensus on pricing.
The company, the largest beer brewer in Asia-Pacific by sales, is likely to set the price towards the lower end of the marketed range of HK$40 to HK$47 (US$5.1 to US$6.01) apiece, according to a person familiar with the IPO and a fund manager briefed by bookrunners of the deal.
Budweiser, the Asian unit of Belgian beer giant Anheuser-Busch InBev (AB InBev), initially planned to fix the price on Friday, its prospectus showed. It will need to announce the price by Monday to achieve a successful listing on July 19.
Depending on the final pricing, Budweiser is potentially raising US$8.3 billion to US$9.8 billion from the listing, surpassing Uber, which raised US$8.1 billion in New York in May to become the world’s largest IPO this year.
The listing could be suspended or withdrawn if the company cannot set the price on Monday
Global investors have subscribed for more than US$10 billion worth of shares, however about 70 per cent of these orders are from hedge funds who bought at prices near the bottom end and tend to hold for the short term, according to a fund manager who declined to be named.
The remaining investors are global long-only funds. Chinese long-only funds have snubbed the offer in favour of Hong Kong-listed China Resources Beer, a brewing company headquartered in Beijing.
The lack of institutional support for the share has some investors worried that it may slip beneath its offer price during debut trade.
Another worry is that China’s consumption of beer and other alcohol could be dampened by a government crackdown on organised crime since the start of the year, which has hurt business at karaoke bars and late-night restaurants in cities across China.
“The listing could be suspended or withdrawn if the company cannot set the price on Monday,” said Steven Tse, senior equity research analyst at Hong Kong brokerage SBI China Capital.
The Hong Kong retail tranche of the offering, accounting for 5 per cent of the overall shares, was estimated by local brokerages to be 3.7 to 5 times oversubscribed, a tepid response in comparison to interest such mega listings have attracted from local investors in the past.
The huge scale of the listing led to a drop in local cash deposits, triggering a surge in Hong Kong’s interbank lending rate (Hibor), or the rate at which banks lend to each other. As interest rates rose, retail investors became less enthusiastic towards the listing offer, brokers said.
One-month Hibor spiked to 2.99 per cent late last week, the highest level since October 2008, before easing to 2.18 per cent on Friday.
Budweiser sells more than 50 beer brands in 39 territories, and counts China, Australia, South Korea, India and Vietnam among its key markets in Asia-Pacific.
The brewer is the largest by sales in China, according to data from industry consultancy GlobalData cited in Budweiser’s prospectus.
The company focuses on high-end beer, which represents the fastest-growing segment in the Asian market, according to GlobalData.
Proceeds from the listing will be used to repay loans due to AB InBev subsidiaries, according to the listing prospectus.
