Budweiser Brewing Co APAC's successful IPO is just what Hong Kong's stock market needs after months of political turmoil.
 From left, Frank Wang, Executive Director, Jan Craps, Executive Director and CEO and Guilherme Castellan, Chief Financial Officer of Budweiser Brewing Company APAC Limited pose with products in Hong Kong. |
Ongoing civil strife in Hong Kong did not hinderBudweiser Brewing Co APAC from successfully pricing its initial public offering (IPO), raising approximately US$5 billion in the process.
The company—the Asia-Pacific unit of Anheuser-Busch—sold a base 1.26 billion shares at the bottom of the indicated HK$27-$30 range and partially exercised a greenshoe option for another 189 million shares to that base on the back of strong demand, bringing the total raised to 1.45 billion shares.
Singapore’s sovereign wealth fund GIC was a cornerstone investor in the offering, providingtraction to the execution process. The IPO garnered multiple times the book cover for the institutional tranche while the retail tranche was fully covered.
At the HK$27 per share offering price, Budweiser Brewing Co APAC is valued at US$45.6 billionfor a 32.9 times price-earnings ratio.
If the withdrawal of the planned July IPO cast a cloud over Hong Kongas a credible stock listing hub amid a rising tide ofanti-government protests, the trading performance of Budweiser’s newly minted stock dispelled such concerns.
The stock opened around 1.5% higher when free to trade on September 30 and closed out 4.4% higher at HK$28.2 per share. Budweiser APAC will no doubt be pleased with this outcome, although this was somewhere short of the original plan in July to raise nearly double the amount.
Certainly Hong Kong Exchanges and Clearing will berelieved at this turn of events as fears that Hong Kong’s status as a vibrant regional andglobal financial hub became widespreadafter months of street protestsroiled the city and threw its relationship with theChinese government into question.
Despite the cheerful optics surrounding Budweiser’s trade—the second largest this year following Uber’s US$8.1 billion IPO in May—the reality is rather stark: Hong Kong IPOs raisedUS$16.3 billion-equivalent so far this year,roughly 50% less compared to the same period last year.
Still, Budweiser’s first day price action has created an auspicious tailwind for Hong Kong’s IPO market, with bookbuilding having commenced on Wednesday for sporting apparel distributor Topsports International—part of Chinese footwear retailer Belle International—which plans to raise up to HK$9.4bn via the placement.
The indicative price range for the distributor of bands such as Adidas and Nike is HK8.3-$10.1 per share which represents a forward PE ratio of 14-17 times and a market capitalization of US$6.5 billion-$8.0 billion.
Books are expected to open shortly on planned IPOs for Bank of Guizhou and Home Credit, with ESR Cayman and China Feihe in the development stages, and listing approval expected this month. Each IPO deal is circled to raise around US$1 billion.
Bank of Guizhou—founded in 2012 via the merger of three commercial banks in the eponymous south-western province—commenced pre-marketing for its planned IPO in early September. It booked healthy profits of US$139 million in the first quarter of this year and enjoys total assets of US$50.6 billion.
