The world’s biggest brewer, Anheuser-Busch InBev, filed plans on Friday to spin off its Asian business via a Hong Kong initial public offering. Photo: File

INTERNATIONAL – The world’s biggest brewer, Anheuser-Busch (AB) InBev, filed plans on Friday to spin off its Asian business via a Hong Kong initial public offering, in a deal which two sources with knowledge of the matter said could be worth at least $5 billion (R71bn).

The move comes as the Belgium-based giant is working to reduce a $102.5 billion debt pile accumulated following the late 2016 purchase of rival SABMiller for around $100bn.

It has already halved its proposed dividend and warned any payouts would grow only slowly as it works on cutting its ratio of net debt to Ebitda (earnings before interest, tax, depreciation and amortization) – a key measure of leverage – over time to about 2 from 4.6 at the end of 2018.

The brewer said the IPO of Budweiser Brewing Company APAC would involve a minority stake and that it would continue to maintain a significant holding in the listed entity.

No details of pricing, timing or deal size were given in the filing. AB InBev said the timing would depend on market conditions, but that its current expectation was to complete the deal over the summer.

The company said too that it could not comment on valuation or deal size. However, sources said the offering was likely to be at least $5bn. Analysts at Jefferies have said that $40bn-$50bn would be a reasonable valuation for the Asia-Pacific business.

AB InBev said on Tuesday that an initial public offering (IPO) of its Asia business, which includes a portfolio of 50 beer brands, could help create a brewing champion for the region, where increasingly wealthy consumers are trading up to higher-margin premium beers, such as Budweiser or Corona.

Asia is the largest beer consumption region by volume, accounting for 37 percent globally, and also one of the fastest-growing markets, the company said in its draft prospectus filed on Friday.

The region produced 18 percent of AB InBev’s sales by volume and 14 percent of its underlying operating profit last year from sales worth $8.46bn, according to the prospectus.

HONG KONG BOOST

At $5bn, the IPO would be a welcome boost to Hong Kong, and the largest public offering in the city since China Tower Corp raised $7.5bn from its Hong Kong stock float in August last year.

Companies have raised just $4.5bn through Hong Kong listings so far this year, lagging the $12.1bn raised on the New York Stock Exchange and the $9.4bn raised on Nasdaq, Refinitiv data as of Friday showed.

JPMorgan and Morgan Stanley are the joint sponsors of the proposed float.

Reuters