Weak Demand Forces AB InBev to Scrap the Year’s Biggest IPO

The talk of a mega initial public offering is always exciting and especially so when the IPO in question belongs to the Asian business of the world’s biggest brewer Anheuser-Busch InBev. It was supposed to be the biggest IPO of the year, with the company deciding to sell a staggering $9.8 billion worth of shares in its Asian business and needless to say, it generated a lot of excitement over the past week or so. The name of the Asian subsidiary in question is Budweiser APAC which is, for all intents and purposes, the Asian arm of the world’s biggest brewer. It markets as many as 50 of Anheuser-Busch InBev brands in some of the biggest beer markets in the world that includes Australia, Vietnam, China, and South Korea.

The scale of the operations of this particular business is huge, but in a new development, Anheuser-Busch InBev has decided to scrap its plans to have the IPO after the company discovered that the demand for those shares was quite weak. On Friday, the company released a statement in which it confirmed that it was not going forward with the planned IPO and while a range of factors was cited, Anheuser-Busch InBev ultimately blamed the prevalent market conditions. The IPO was hugely important for the company since the company has run up debts to the tune of $100 billion due to the spate of acquisitions over the past few years. The mega IPO would definitely have been a reprieve its balance sheet. The company’s logic was sound since it tried to raise a large amount of cash through its fast-growing Asian business.

An investment strategic explained that at this point of time, investors have grown far more risk averse and are more interested in making cautious investments in order to preserve their capital. Investment in an IPO of this nature does not really seem to be in sync with such an approach. The investment strategist went on to add,

“Given the high valuations and growing concerns about recession risk, companies are thinking if we don’t list now, it might be too late. But for investors, there is more caution in the market now.”