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Anheuser-Busch InBev said on Friday it will not proceed with the initial public offering of its Asia Pacific unit, Budweiser Brewing Company APAC, on the Hong Kong Stock Exchange.

The company said the decision was due to “several factors, including the prevailing market conditions.”

It had been set to be world’s biggest listing of 2019. The company had been seeking to raise up to $9.8 billion.

The move, against the backdrop of a protracted U.S.-China trade war, set a downbeat tone for large Hong Kong listings, seen as a barometer for future large share sales, such as Alibaba’s Hong Kong listing.

Budweiser APAC, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, received offers for shares within its targeted range from hedge funds and private wealth managers but some large long-only U.S. investors, which are often prioritized in an IPO, offered below the HK$40 per share level, other people familiar with the matter said.

IPOs on Hong Kong exchanges are only able to price up to 10% below the target range without regulatory approval if the risk is flagged in its prospectus.

This was not sufficiently highlighted in the Budweiser filing so AB InBev held firm on the HK$40 price, meaning some U.S. investors trimmed the size of their orders, sources said.

The company’s executives and representatives from the deal’s co-sponsors, JPMorgan and Morgan Stanley, met in New York to discuss pricing after the books closed on Thursday.

People familiar with the issue said it was struggling to secure enough demand from long-term investors.

Typically investors put in orders for more shares than they actually expect to receive in an effort to ensure they get a good allocation. Deals where those investors end up with more than they really expected often trade poorly to begin with.

All the sources who spoke to Reuters did so on condition of anonymity as they were not authorized to speak on the matter.

Budweiser APAC was seeking to raise between $8.3 billion and $9.8 billion through the float, much of which will go towards paying down debt at its highly leveraged parent. Trading was set to begin on July 19.

AB InBev, the world’s largest brewer, has been working to reduce a debt pile of more than $100 billion that it built up with the purchase of nearest rival SABMiller in late 2016.

AB InBev has said it will reduce its net debt to EBITDA ratio to below 4 by the end of 2020 from 4.6 at the end of last year and that this is not dependent on the Asian flotation. It says the optimal ratio is 2.

AB InBev stock, which has rallied 36% this year, is still down 11% over the last 12 months. It fell 1.5% on Friday.

Biggest IPO this year

The company had positioned its Hong Kong listing as creating a champion in Asia-Pacific, where sales are growing as increasingly wealthy consumers turn to premium beer brands.

Even at the low end of the price range, the IPO would surpass the $8.1 billion New York float of Uber in May, the biggest so far this year, Refinitiv data shows.

The IPO was set to precede Alibaba’s plans to raise as much as $20 billion through a Hong Kong listing.

Last month, logistics real estate developer ESR Cayman shelved its up to $1.24 billion Hong Kong IPO “in light of the current market conditions”.



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