Investors love seeing new stocks come online. Anheuser-Busch InBev had posted the flyers for the latest blockbuster initial public offering (IPO) of its Asian business! But soon, it was clear it had to abort. What went wrong?
The Belgian alcoholic drinks firm, AB-InBev, gets its Asian exposure from ‘Budweiser Brewing Company APAC.’ As the owner of Corona and Stella Artois, its parent Anheuser-Busch expected a stampede of investors to scramble for the first commercial sip of Bud as its 19th of July due date neared. Ready to be born onto the Hong Kong stock exchange, long term investors are usually preferred buyers, with their approach supposed to make the ground shake. Except, it didn’t. Worried about demand, AB-InBev has called off the IPO, and now it’s back to the drawing board.
Most disappointed might be AB-InBev, which had hoped to raise 10 billion dollars through the sale of its Asian wing to investors. That money would have gone a way towards paying off a $100 billion boatload of debt, amassed by the brewer when it splashed out big SABMiller in 2016. Until it pays its obligations, investors will be kept waiting for more exciting use of profits.
Most concerned, however, might be the overall Asian market. As announcements for the IPO drew closer, the tumbleweed was rolling through the US, not Hong Kong. Foreign investors were ominously frugal about how much they were willing to invest in the region, not least due to the ongoing trade tensions.
Alibaba will try to show AB-InBev how it’s done when it attempts a $20 billion IPO later this year. That’ll be a real test of market sentiment, far beyond Asia. So, on your toes!