Anheuser-Busch InBev adds Citi, BAML to banks working on $5 billion Asian IPO: sources

Anheuser-Busch InBev adds Citi, BAML to banks working on $5 billion Asian IPO: sources

HONG KONG (Reuters) – The world’s biggest brewer, Anheuser-Busch InBev, has added Citigroup and Bank of America Merrill Lynch to the team of banks working on the sale of its Asia-Pacific business, three people with direct knowledge of the matter told Reuters.

FILE PHOTO: The logo of Anheuser-Busch InBev is pictured outside the brewer’s headquarters in Leuven, Belgium February 28, 2019. REUTERS/Francois Lenoir

The two join Morgan Stanley and JPMorgan, both of which are the sponsors, or leads, for the planned Hong Kong initial public offering (IPO) which could raise up to $5 billion for the heavily indebted brewer, the people said, declining to be identified as they were not authorized to speak to the media.

With main markets China and Australia, the region last year made up 18 percent of group volume and 14 percent of underlying operating profit, which in turn rose 13 percent to $3.1 billion. It was not clear how much of the business was up for sale.

AB InBev and BAML did not immediately respond to a request for comment. Citi declined to comment.

The Leuven, Belgium-based maker of Budweiser, Corona and Stella Artois brands aims to spin-off its Asia-Pacific business to reduce leverage, the people said.

AB InBev’s net debt stood at $102.5 billion at the end of December, a figure inflated by its late 2016 purchase of nearest rival SABMiller for around $100 billion. AB InBev wants to bring its net debt/EBITDA ratio to around two times from a multiple of 4.6 at the end of last year. With that goal, it has halved its proposed dividend and said payouts will only grow slowly.

While AB InBev’s shares have risen 19 percent since reporting forecast-beating earnings in February, the brewer is battling to reverse a longer share price decline. Over the past two years, its shares have fallen 24 percent, in contrast to rivals Heineken and Carlsberg, which have gained 15 and 28 percent respectively.

The IPO would not be the first time AB InBev has sold Asia-Pacific assets to reduce debt. After InBev bought Anheuser-Busch in 2008, AB InBev sold South Korean unit Oriental Brewery to private equity firm KKR – only to buy it back in 2014.

The IPO is slated for the second half of the year and the brewer expects to file with the Hong Kong stock exchange in the first half, the people said. One of the people said the filing would happen either later this month or early May.

At $5 billion, the IPO could be the largest in Hong Kong this year, where the flood of companies looking to go public has slowed to a trickle.

Companies have raised $2.9 billion through Hong Kong listings so far this year, lagging the $6.4 billion raised on New York’s Nasdaq, showed Refinitiv data as of Friday.

Hong Kong topped all other exchanges globally last year with stock market listings raising $36.3 billion. This year, however, is widely expected to be slower due to thinning numbers of Chinese companies looking to go public, particularly in tech.

Reporting by Julie Zhu and Julia Fioretti; Additional reporting by Kane Wu in HONG KONG and Philip Blenkinsop in BRUSSELS; Editing by Jennifer Hughes and Christopher Cushing

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Newmont shareholders OK $10 billion Goldcorp takeover, creating biggest gold producer

Newmont shareholders OK $10 billion Goldcorp takeover, creating biggest gold producer

TORONTO (Reuters) – Newmont Mining shareholders on Thursday approved the company’s $10 billion takeover of Goldcorp Inc which is set to create the world’s biggest gold producer with assets across the Americas, Africa and Australia.

FILE PHOTO: Visitors pass the Newmont Mining Corporation booth during the Prospectors and Developers Association of Canada (PDAC) annual convention in Toronto, Ontario, Canada March 4, 2019. REUTERS/Chris Helgren/File Photo

About 98 percent of votes at a special meeting were in support of Newmont’s proposal to issue new stock to fund its takeover of Goldcorp, the Denver-based company said in a statement. Goldcorp’s investors voted to approve the acquisition last week.

The deal, the biggest takeover in the gold sector’s history according to Refinitiv data, faced some initial opposition from Newmont investors who said it overly favored Goldcorp shareholders. But they rallied behind the proposal on the promise of a special dividend.

The 88-cent-per-share special dividend will be paid on May 1 to those who hold Newmont shares as of April 17, according to the statement.

Newmont shares were 0.7 percent lower at $36.01 in morning trading in New York, in line with the benchmark S&P/TSX Global Gold Index. Goldcorp shares slipped 0.26 percent to C$15.41 in Toronto.

“We thank Newmont’s shareholders for their overwhelming support for this compelling value creation opportunity as we build the world’s leading gold company,” Newmont Chief Executive Gary Goldberg said in the statement.

The new company, to be called Newmont Goldcorp, will overtake current market leader Barrick Gold Corp in annual production, churning out 6 million to 7 million ounces of gold annually over the next 10 years, compared with Barrick’s forecast of 5.1 million to 5.6 million ounces for 2019.

Newmont Goldcorp expects to shed between $1 billion and $1.5 billion of assets to focus on its most promising operations. This, combined with mines Barrick plans to sell in the wake of its acquisition of Randgold Resources, is expected by analysts to fuel a flurry of deals in a sector that has been focused on cutting costs rather than pursuing growth for several years.

Newmont’s acquisition of Goldcorp had faced several hurdles, beginning with Barrick’s hostile takeover bid for Newmont in February, which required it to abandon its deal with Goldcorp.

That was resolved through the creation of a joint venture of Newmont and Barrick’s operations in Nevada, which was estimated to create $4.7 billion in synergies.

Reporting By Nichola Saminather; Editing by Bernadette Baum

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Skittish investors pull more than $20 billion from stocks, rush into bonds: BAML

Skittish investors pull more than $20 billion from stocks, rush into bonds: BAML

LONDON (Reuters) – Global equity funds saw massive outflows this week, a sharp reversal from last week’s inflows as pessimism over economic growth gripped investors once again, driving them instead to search for yield in credit and buy safer assets like bonds.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2019. REUTERS/Brendan McDermid

Some $20.7 billion was pulled from equity funds in the week to March 20, while $12.1 billion was ploughed into bond funds, the biggest inflows since January 2018, Bank of America Merrill Lynch (BAML) strategists said on Friday citing data from EPFR.

Despite big gains for stocks globally this year, positioning is decidedly negative with $66.8 billion outflows from equity funds year-to-date.

This week’s heavy outflows showed investors remain skittish, having re-entered equities with $14 billion inflows last week.

Investors are hunting for yield, the strategists said, noting the ninth straight week of inflows to investment-grade bond funds – $6.6 billion this week – while high-yield bond funds drew in $3.2 billion and $1.2 billion went into EM debt.

The market is struggling to digest a rapid about-turn from the U.S. Federal Reserve on interest rates as economic growth disappoints globally and fears of a deflationary environment return.

“Extraordinary abrupt end to central bank hiking cycle & Fed paranoia of credit event are uber-bullish credit & uber-bearish volatility,” the strategists wrote.

“Inflows to ‘deflation assets’… continue to trounce inflows to ‘inflation winners’,” they added.

Overall the bank’s “Bull & Bear” indicator of investor positioning and sentiment held at a neutral level of 4.7 out of 10, signalling investors’ uncertainty over where the market might go next.

By region, the U.S. saw the biggest outflows with $13.2 billion, while $4 billion was pulled from European equities.

“Short European equities” was named by investors as the “most crowded” trade in a BAML survey on Tuesday, prompting some contrarian buying of European stocks, but not enough to move the needle in terms of flows.

Japanese equities also suffered outflows of $700 million, the sixth straight week of outflows. Emerging market equities have had outflows four of the past five weeks, and lost $400 million this week.

Investors turned on technology stocks, pulling $700 million from the sector. Defensive real estate stocks were the most favoured, attracting $400 million.

Cumulative flows into tech stocks, long-standing investor darlings, have stalled, BAML strategists noted, as doubts over their status as market leaders grew and sluggish economic growth weighed on performance.

Reporting by Helen Reid; editing by Josephine Mason

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