UPDATE 1-Prada prices $2.1 bln HK IPO weighed by global risk aversion(Oct 11, 2011)
sources * Prada's offering weighed by global volatility * Company, shareholders raise $2.1 bln in Hong Kong IPO (Adds IPO pricing, changes dateline to HONG KONG/MILAN) By Elzio Barreto, Elisa Anzolin and Gianluca Semeraro HONG KONG/MILAN, June 17 (Reuters)- Italian fashion housePrada SpA pulled out all the stops during meetingswith investors around the world for its IPO, which raised about$2.14 billion, but reduced risk appetite weighed on the deal'spricing on Friday. The Milan-based company priced the initial public offeringat HK$39.5 a share, three sources with direct knowledge of thedeal told Reuters. Prada and shareholders Prada Holding BV and Intesa Sanpaolo sold 423.3 million shares raising HK$16.72 billion($2.14 billion), said the sources, who declined to be namedbecause the decision was not yet public. Despite all the glamour around the IPO, increased volatilityin global markets and this week's poor debut by luggage makerSamsonite in Hong Kong weighed on the offering, withPrada cutting the mid-point of its IPO on Thursday. "The equity market has its own life and may not haveanything to do with reality in luxury goods markets," saidSelina Sia, head of consumer research at Mirae Asset in HongKong. "Luxury demand is very self explanatory and it makes a lotof sense for companies like Samsonite and Prada to list in HongKong, but we're talking about quite a volatile market thesedays." In Hong Kong last week, the company hosted a15-minute fashion show to a packed room of top fundmanagers who jostled for space at the glitzy Grand Hyatt Hotelto see Miuccia Prada's creations and hear about booming demandfor luxury goods in China. At its home in Milan, the company's management spoke toinvestors in an office of Prada's Miu Miu brand, its fastestgrowing line of business that is known for its modern andcolorful dresses and handbags. VOLATILE MARKETS The benchmark Hang Seng Index has declined in 10 ofthe last 11 sessions, down 7.3 percent, and world stocks hit a three-month low on Thursday, weighing oninvestor demand for new stock sales. Samsonite, the world's largest luggage maker, closed 7.7percent lower in its debut, after trading nearly 11 percent downearly on Thursday. On top of volatile markets, Prada also had to deal withconcerns from fund managers about its rich valuation, and tepiddemand from Hong Kong retail investors who were put off byhaving to pay capital gains taxes in Italy. Prada filed to sell shares at an indicative price range ofHK$36.5 to HK$48 each, before narrowing the range to betweenHK$39.50 and HK$42.25 a share, according to two sources withknowledge of the deal on Thursday. At the top end of its original range, Prada would be tradingat 27 times projected 2011 earnings, far higher than an averageof 20.4 times for luxury retailers such as LVMH ,Hermes International SCA , and Cie Financiere Richemont , according to Phillip Securities forecasts. At the revised guidance Prada would trade at a P/E of22.8-24.4 times, more in line with global rivals. Goldman Sachs , Credit Agricole's CLSAbrokerage and Italian banks UniCredit SpA and IntesaSanpaolo's Banca IMI unit, which are both representedon Prada's board, are joint bookrunners and global coordinatorsof the IPO.($1 = 7.801 Hong Kong Dollars) (Editing by Dhara Ranasinghe)
