Hong Kong - Italian fashion house Prada, which is seeking to
raise up to $2.6bn through a Hong Kong IPO, has generated five times demand for
its offer, a source familiar with the matter told Reuters on Sunday.
The source declined to say which institutions have committed
funds to the IPO or at what price point was the book covered. The information
was based on road shows up to last Thursday, the source added.
The Milan fashion house, known for its leather handbags,
brightly-coloured shoes and long boots, launched the retail portion of the IPO
It set an indicative price range of HK$36.5 ($4.69) to HK$48
($6.17) a share for the IPO, confirming a Reuters story issued last week. That
values the company between $11.4bn and $14.6bn.
The source declined to be indentified as the information is
not public. A Prada spokesperson declined to comment.
Strong demand for Prada's initial public offering comes at a
time when investors have balked at some recent Hong Kong offers amid choppy
"Despite recent market volatility, the Prada team is
very optimistic (about the IPO)," Prada's chief executive Patrizio
Bertelli told reporters via video conference link from Milan.
A successful IPO will make it the first Italian company to
float in Hong Kong, adding to the growing list of consumer brands seeking to
However, fragile market sentiment has weighed down on some
recent offerings, with luggage maker Samsonite International SA pricing its
$1.25bn IPO at the bottom of a revised price range, while startup Australian
miner Resourcehouse pulling its $3.6bn sale.
"We are not worried at all, just a little tired from
the road show," said Carlo Mazzi, deputy chairperson of Prada said. "We
are not worried or stressed about the offering."
After scrapping several attempts to list its shares in the
past, Prada is offering 16.5% of its enlarged capital, or 423.3 million shares.
At the top end of the range, the IPO is being priced at 27 times projected 2011
earnings, higher than the average of European top luxury groups such as Tod's,
Burberry, and LVMH.
Some investors expect the IPO to be priced at the middle of
the indicative range due to skittish sentiment.
The Prada management said the IPO price range was reasonable
and represents the value in the company. It did not share the view that the
offer was expensive.
A successful IPO - designed to cut Prada's debt of around
€1bn and fund further expansion in Asia - would make Prada one of the
most valuable luxury goods groups, but some fund managers balked at the price
Prada, 95% owned by the families of chief executive Bertelli
and his fashion designer wife Miuccia Prada, is betting on a boom in the
consumption of luxury items in China, the world's second-largest economy, to
lure investors to the IPO.
China will account for 20% of the global luxury market by
2015, consulting firm McKinsey & Co says.
The IPO is slated to be priced on June 17 and the shares
will start trading in Hong Kong on June 24 under the symbol "1913,"
the year the company was founded in Milan.
The 423.3 million shares are being sold by Prada and
shareholders Prada Holding BV and Intesa Sanpaolo.
Prada started its business in 1913, when Mario Prada began
selling leather bags, trunks and silverware to the European elite from his
store in Milan's Galleria Vittorio Emanuele.
The company has since expanded throughout Europe, the United
States and Asia to include mobile phones, perfumes and eyewear.
Profit more than doubled in the year ended January 2011 to
€235.6m. Prada said in a Hong Kong filing on Friday it expected
half-year profit to rise 46%.
Goldman Sachs, Credit Agricole's CLSA brokerage and Italian
banks UniCredit SpA and Intesa Sanpaolo's Banca IMI unit, both on Prada's
board, are joint bookrunners and global coordinators of the IPO.