IFR Asia – July 06, 2019

News

Budweiser serves up King of IPOs

„ Equities Jumbo offering comes with no cornerstone tranche

BY FIONA LAU

BUDWEISER BREWING COMPANY

APAC, the Asia-Pacific business

of Anheuser-Busch InBev,

is looking to raise up to

HK$76.6bn (US$9.8bn) from a

Hong Kong IPO that could be

the world’s largest this year.

The maker of Foster’s and

Stella Artois is marketing

15.4% of its enlarged share

capital at a pre-shoe valuation

of around US$54.3bn–$63.7bn

and a post-shoe valuation of

around US$55.5bn–$65.2bn. It

will sell about 1.63bn shares

at an indicative price range of

HK$40.00–$47.00 a share.

“The bottom of the price

range reflects feedback during

pre-marketing. Earlier reports

were talking about a valuation of

US$70bn, and that isn’t even in

the range,” one ECM banker said.

Even at the bottom of the

price range, the US$8.3bn

deal size will overtake the

US$8.1bn US IPO of ride-hailing

giant Uber Technologies in

May and stand as the largest

globally since SoftBank Corp’s

US$23.3bn-equivalent Tokyo

listing last October.

Unlike most jumbo IPOs in

Hong Kong, the Budweiser deal

comes with no cornerstone

investors.

“Feedback from pre-

marketing was encouraging

and the issuer has confidence

the deal can be done even

without cornerstone investors,”

said a person close to the deal.

“Not bringing in cornerstones

has also allowed the company

to have more flexibility on

setting the price range.”

Last year, mobile phone

infrastructure company

China Tower sold about 19%

of its HK$58.8bn IPO to 10

cornerstone investors. In

2016, Postal Savings Bank of

China, the country’s biggest

lender by branches, sold 77%

of its HK$59.12bn IPO to six

cornerstone investors.

The index implications

are also important. Without

a cornerstone tranche,

Budweiser’s entire 15% offering

will be counted as a free float,

which allows the company to

be included in MSCI indices,

according to Sumeet Singh,

head of research at Aequitas

Research.

Market participants said

there is demand for consumer

companies that are generating

real earnings.

“Investors see good returns

and fair valuations in the

consumer sector... It’s much

easier to value these companies

Malaysian tolls 06 Air India jumbo 07 Tech board exceeds expectations 08

China woos overseas bond buyers

„ Bonds MoF sells first CNH bond in Macau, plans Europe meetings

BY CAROL CHAN, YANFEI WANG

China is expanding its footprint

in the international bond

markets as it looks to enhance

its profile at a time when global

attention is focused on trade

tensions with the US.

Last week, acting through

the Ministry of Finance, the

government sold renminbi-

denominated bonds in Masau

for the first time, furthering

the internationalisation of

the Chinese currency and

the development of the CNH

market.

This week and next, MoF

officials will meet fixed-income

investors in Europe ahead of

a potential foreign currency-

denominated bond offering

later this year, which would

follow two US dollar bond

issues in the past two years.

The MoF’s core team in

charge of international funding

will visit Frankfurt on July

12 and London on July 15,

according to people familiar

with the situation. The official

purpose of the meetings is to

update investors on China’s

economic and financial

situation.

Bank of China, Bank of

Communications and Deutsche

Bank are arranging the

Frankfurt meetings, while

BOC, BoCom, HSBC and Standard

Chartered Bank are setting up

the London leg.

China ended a decade-long

absence from the US dollar

bond market in October

2017, when it printed

US$2bn of sovereign bonds

to overwhelming demand. It

returned in October last year

for a further US$3bn, again

attracting strong demand

despite a global market sell-off

during bookbuilding.

Ahead of these two deals,

MoF officials only held

roadshows in Hong Kong,

confident that demand would

far outweigh supply.

The MoF has not announced

any plans for foreign currency-

denominated bonds so far this

year, but the investor meetings

are being watched with interest

and the choice of two European

cities has led some to speculate

that China may be considering

a new currency denomination.

“The MoF probably will

continue to issue foreign

currency-denominated bonds to

international investors. To hold

a roadshow in Europe doesn’t

mean that the MoF is looking

to issue euro bonds. I think for

currency, it is flexible,” one

person said.

LOTUS BONDS

Last Thursday, the MoF broke

new ground closer to home

when it sold an offshore

renminbi-denominated bond

in the special administrative

region of Macau. The Rmb1.7bn

(US$247m) three-year notes

priced at 3.05%, inside initial

guidance of 3.20%.

The Reg S unrated issue will

be cleared through Chongwa

(Macao) Financial Asset

Exchange and Macau will grant

it tax exemption.

An additional Rmb300m

3.30% two-year retail tranche

is open to local investors until

July 19.

The offering comes ahead of

the 20th anniversary of Macau’s

return to China in December

1999 and is intended to

demonstrate Beijing’s support

“The China business of Budweiser probably

deserves an at-par or premium valuation to CR

Beer and Tsingtao. But don’t forget the listing

also includes non-China businesses which have

slower growth.”