IFC International looks at why Budweiser IPO fell apart

Top Quote Demand was crimped by high interest rates which made investors reluctant to borrow from brokers to buy the shares, say analysts. End Quote
  • (1888PressRelease) July 27, 2019 - For months, executives from Anheuser-Busch InBev raced to prepare for a listing of its Asian subsidiary, Budweiser Brewing Company APAC. It should be this year’s biggest initial public offering and would surpass Uber.

    The hope had been that the Belgian company’s leading position in the premium beer market in China to raise as much as US$9.8 billion, for a valuation of $64 billion.

    William Lui of IFC said, “AB InBev discovered that it wasn’t enough to convince investors to splurge on the King of Beers, and shelve plans for the mammoth IPO in Hong Kong”

    AB InBev’s setback can be explained at by shifting trends in China, where consumers are increasingly moving away from traditional beers toward higher-priced craft brews.

    Meanwhile, competition in China is spiking after rival Heineken NV forged a blockbuster deal with a state-owned company. This has left many investors wary of buying into Budweiser’s richly valued IPO.

    Lui thinks, “there is such a vast market for beer drinkers now as the Chinese love to splash out on expensive craft beers and spirits.”

    “People used to buy a “BUD” because it was from USA. Now that’s the last thing they would order”. said Lui.

    In its statement, AB InBev said it wasn’t proceeding with the transaction partly due to “prevailing market conditions.” The company may explore options such as selling a minority stake in the Asian business, though there is no immediate plan for a deal, people familiar with the matter said.

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