AB InBev’s Asia business files for Hong Kong IPO valued at US$5b

ASIA – World’s largest brewer, AB InBev has filed for Hong Kong initial public offering (IPO) of its business in Asia Pacific, in a deal which could be worth US$5 billion.

According to a Reuters report, AB InBev is considering listing a minority stake in its Asian operations to create a separate business.

The move comes as the Belgium-based giant is working to reduce a US$102.5 billion debt pile accumulated following the late 2016 purchase of rival SABMiller for around US$100 billion.

AB InBev aims to spin off the business to reduce its net debt, which stood at $102.5 billion at the end of December, a figure inflated by its late 2016 purchase of nearest rival SABMiller for around $100 billion.

It wants to bring its net debt/EBITDA (earnings before interest, tax, depreciation and amortization) ratio to around two times from a multiple of 4.6 at the end of last year.

With that goal, it has halved its proposed dividend and said pay-outs will only grow slowly.

The Belgium-based company acknowledged that a minority stake listing would accelerate this process but said its commitment to reduce the multiple to below 4 by the end of 2020 was not dependent on it.

The company said the main merit of a Hong Kong listing would be to create a champion in the Asia-Pacific, where sales are still growing and increasingly wealthy consumers are trading up to higher-margin premium beers, such as its Budweiser or Corona.

At US$5 billion, the IPO, which is slated for the second half of the year according to sources, could be the largest in Hong Kong this year, where a flood of companies looking to go public has slowed to a trickle.

AB InBev’s Asia-Pacific region, whose main markets are China and Australia, last year made up 18% of group volume and 14% of underlying operating profit, while its revenues were US$8.47 billion.

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