AB InBev considers a public listing and a partial sale of its Asian business in order to help relieving its heavy debt burden of US$109 billion as of June 30, mainly stemming from its acquisition of rival SABMiller in 2016. Bloomberg reported on Friday that AB InBev is discussing a possible multibillion-dollar listing in Hong Kong.
According to the report , the company could raise as much as US$ 5 billion in the first instance with the whole Asian business valued at US$ 70 billion which also includes Australia and New Zealand. According to experts, this valuation is ambitious given the fact that this is half the market capitalization of the whole company and the Asia-Pacific region accounts only for 20 percent of group volumes and 15 percent of AB InBev’s underlying profit. Nevertheless, it might be justified to value the Asian business higher than the business in other parts of the world especially because the portfolio includes fast growing markets like China.
Other experts as quoted in the Financial Times see a “more realistic valuation” of US$35 billion to US$45 billion dependent on what businesses to include into the package. AB InBev has structured its business in various business zones across the globe. Following a major reorganization last year the former two Asian Pacific business zones Asia Pacific North with countries like China, South Korea and Japan and Asia Pacific South with countries like Australia, New Zealand, India, Vietnam and other South and Southeast Asian countries have been merged into one APAC zone headquartered in Shanghai (inside.beer, 1.8.2018). The unit comprises 60 breweries and 40.000 employees in a region servicing more than 4 billion people.
Given a listing threshold of 25 percent in Hong Kong and considering the lower valuation, the IPO could generate proceeds of about $10bn for AB InBev.
Bloomberg also points out that such a move would create an attractive regional acquisition currency as AB InBev could always sell additional stocks.
In response to the Bloomberg report AB InBev said in a statement: "In line with our culture, we always look at opportunities to optimize our business and drive long-term growth and we are very committed to our business in the Asia-Pacific region and excited about the potential of this geography."
In addition to the planned IPO, AB InBev announced on Thursday that it has completed the pricing of US$ 15,5 billion aggregate principal amount of bonds with interest rates of 4.15% for bonds with a maturity date of January 2025 up to an interest rate of 5.8% for bonds expiring January 2059.
The net proceeds of the offering will be used for general corporate purposes, including the repayment of upcoming debt maturities in 2021 to 2024 and 2026, including the funding of the Company’s previously announced tender offers. The bond sale has not only be a test for the investment- grade bond market, where risk premiums have generally been on the rise but also for AB InBev, whose credit ratings have been downgraded lately by Moody’s Investors Service from A3 to a sobering Baa1 (inside.beer, 18.12.2018).