The nervousness that has shaken global markets this week took its toll on Prada’s highly anticipated initial public offering, forcing the Italian luxury fashion house on Friday to price its shares at the low end of a previously announced range.
Prada, which is based in Milan and is one of several high-profile Western companies to list in Hong Kong this year, priced its shares at 39.50 Hong Kong dollars, or $5.06, apiece, according to a person with direct knowledge of the transaction, who spoke anonymously because the information was not yet public.
This means Prada will raise $2.1 billion, rather than the maximum of $2.6 billion that it had targeted with the original price range of 36.50 to 48 Hong Kong dollars, which was set before the bout of risk aversion that rattled global markets this week.
Greece’s debt woes and nervousness about the prospects for global growth sent markets worldwide reeling this week, prompting Prada to revise down its price guidance on Thursday.
The fragile investor sentiment also made for a rough trading debut for the luggage maker Samsonite on Thursday in Hong Kong. Samsonite shares gained 0.6 percent on Friday, but at 13.46 Hong Kong dollars, they remained below the issue price of 14.50 Hong Kong dollars.
Those jitters also sent shares of Pandora Media plunging 24 percent on Wall Street on Thursday, only the second day of trading for the online radio company.
Still, Prada’s $2.1 billion listing — the sum could still rise 15 percent if an over- allotment option is exercised — is the fifth-largest in the biggest in the world so far this year, according to Dealogic. Others were the Swiss commodities trader Glencore, Hutchison Ports, which listed in Singapore in March, and the American companies HCA Holdings and Kinder Morgan.
The Prada I.P.O. is also the biggest in Hong Kong this year, surpassing that of Shanghai Pharmaceuticals, which raised about $2 billion in May. Glencore raised $10 billion in a dual listing in London and Hong Kong, also last month, but only a small portion of the proceeds came from Hong Kong.
With a new valuation of $13 billion, Prada is dwarfed by the likes of LVMH Moët Hennessy and Hermès, whose market capitalizations stand at nearly $80 billion and $30 billion, respectively. But Prada is priced at a premium to others in the sector on a price-to-earnings basis.
‘‘To price a deal this size in a market that is as difficult as now illustrates that there is a high level of interest in what is an undiluted play on the luxury sector,’’ said the person with knowledge of the deal, adding that the offering had seen firm interest from high-quality institutional investors from around the globe, and was nearly three times oversubscribed.
Prada, whose shares start trading on June 24, intends to use the bulk of the proceeds to expand and upgrade its store network. It aims to open an additional 80 directly operated stores a year for the next three years, with 25 of them taking place in the Asia- Pacific region.
Soaring growth and affluence levels in much of the region has made Asia the source of the greatest growth for many luxury and consumer companies.
China, in particular, is fast growing into one of the world’s largest markets for luxury goods. McKinsey estimated in a recent study that by 2015, Chinese consumers will account for more than 20 percent of the global luxury market.
Article source: http://feeds.nytimes.com/click.phdo?i=dd9c7405174f47300926ece78f52324d
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