Anheuser-Busch Braves Hong Kong
It may be a month late, but the giant brewer behind Budweiser has finally put its Asian business on the Hong Kong stock exchange. AB InBev had the second-biggest listing of the year yesterday after Uber!
The chaos of an initial public offering (IPO) blended in perfectly with Hong Kong’s largest protests in history. Since August, scuffles over criminal extraditions have snowballed into a full-blown independence movement. The city ground to a half, house prices cratered, and AB InBev shelved its IPO plans until yesterday. The beverage company probably just got tired of waiting!
It was worth the wait, though. The Asian-Pacific AB business is profitable, predictable, and was green on its opening day (+4%). That’s more than can be said for the lion’s share of recent American stock offerings. Peloton flopped on its first day, and SmileDirectClub, a fitness-based tech unicorn built on smiles, plunged 27.5%.
However, the goal of Anheuser-Busch in shedding its APAC wing is not individual enrichment. It’s actually to repay debt. Four years ago, the Brazilian-Belgian brewer decided to buy competitor SABMiller for £79 billion, and it’s still paying! Borrowed money can hamstring investors as opportunities for a business to reinvest profit in new projects have to be forgone, instead to reduce a debt pile. At least AB InBev is shoring up its long-term prospects, which are its main selling point!
A can of AB’s Bud Light will stand on its own during a recession, as consumers drowning their sorrows rarely opt for cheaper alternatives to their usual drink. With alcohol integral to leisure activities around the world, beer is an investment you could hold for generations. That is, assuming its maker doesn’t take that long to repay its debt!