For many people there is nothing worse than a flat beer. Demand in Hong Kong for the biggest IPO of the year so far was anything but sparkling as Budweiser Brewing Company APAC’s shares proved they were not to everyone’s taste.

The retail offering, which ran from Monday until noon on Thursday, is probably about 3.7 to 5 times oversubscribed, locking in HK$18 billion (US$2.3 billion) to HK$23 billion of capital, according to the latest estimates of 10 stock brokers polled by the South China Morning Post. That is far lower than initial forecasts that the IPO would be 10 to 15 times oversubscribed.

Budweiser Brewing, the Asian unit of beer giant Anheuser-Busch InBev, aims to raise up to US$9.8 billion with its Hong Kong listing.

Analysts said the ice cold response from retail investors in Hong Kong was probably the result of high borrowing costs.

“The Budweiser offering came at a time when the interbank interest rate had risen to the highest in a decade. This has made many investors reluctant to borrow money from stockbrokers to subscribe to the stocks. Many investors are only using cash to subscribe to the Budweiser IPO, which has cut down the leverage,” said Louis Tse Ming-kwong, VC Asset Management’s managing director.

“Budweiser is a big international company. It is so big that it is likely to be added as a constituent stock of the benchmark index. It is expected to be a good long-term investment, but for the retail investors who want to bet on short-term gain, it is not that attractive.”

The one-week Hibor (Hong Kong interbank offered rate) rose to 3.65 per cent last Thursday, the highest since October 2008, as brokers and banks began fighting for money in the interbank market to prepare for investors to borrow from them to subscribe to the biggest IPO of the year. The rate immediately fell back to 2.23 per cent on Thursday when the IPO sale closed.

The high cost for brokers led them to set their margin lending rate higher for the Budweiser IPO, in a range between 3.88 per cent and 5 per cent. The normal rate for an IPO would be around 2 per cent.

“The high borrowing cost for the margin lending, as well as the weaker market sentiment early this week, have made the IPO of Budweiser not as hot as initially expected. The subscription at our firm is not too hot,” said Ben Kwong Man-bun, a director of brokerage KGI Asia.

Budweiser Brewing is the biggest player by sales in the high-end beer segment in several markets including China and India.

Its Belgian parent, AB InBev, is the world’s largest brewer.

The beer giant hopes the listing of its Asia-Pacific business in Hong Kong will raise between US$8.3 billion and US$9.8 billion by selling 1.6 billion primary shares at between HK$40 and HK$47 apiece, according to its listing prospectus. The pricing will be decided overnight (daytime in New York).

Even if it prices at the low end of the offer, the IPO will still be the biggest worldwide this year, surpassing the US$8.1 billion raised in New York by Uber, data from Refinitiv shows.

The mega IPO is a much-needed boost for Hong Kong as it attempts to regain the top spot as the biggest IPO market worldwide. The city dropped to third place in the first half of this year, surpassed by the New York Stock Exchange and the Nasdaq.

The Hong Kong retail tranche represents about 5 per cent of the total shares up for grabs in Budweiser’s IPO, while the rest are for international investors. The stock will start trading on July 19.

The retail demand, as reflected in the oversubscription rate, compared badly with some other mega IPOs in Hong Kong in the last couple of years.

Ping An Good Doctor, which debuted in April 2018, was overbought by more than 650 times, attracting HK$370 billion worth of bids from retail buyers, making it the city’s most sought-after large-scale IPO since 2009.

China Literature, a unit of Tencent, locked in a staggering HK$521 billion of capital in its IPO in November 2017, around a third of Hong Kong’s money supply.