Prada would be the first Italian company to list in Hong Kong, according to Bloomberg.
Timing is good as luxury companies are enjoying resurgent growth led by China. “Current valuations in the luxury sector are not far from their historical highs,” said Marc Willaume, luxury analyst at Raymond James in Paris. “The offering would attract a lot of attention from investors because of the allure of the Prada brand.”
Prada had postponed previous plans to list over the years usually citing adverse market conditions. Market conditions are now promising. The number of middle-income and affluent consumers in China is projected to triple to 415 million in 10 years according to the Boston Consulting Group.
The Milan-based company sells handbags, clothing, leather goods, shoes and accessories under the Prada, Miu Miu, Church’s and Car Shoe brands, and licenses its name for eyewear, fragrances and cellphones. It has 310 company-owned stores globally.
Prada hopes to tap investors in Hong Kong to help fund store openings in the emerging markets.
“It’s the right time to do it,” said Armando Branchini, vice-president of Milan-based consulting firm Intercorporate. “Asian investors will consider the decision to list in Hong Kong as a kind of recognition of, and tribute to, the importance of the region.”
The size of the offering has not been announced, but the company would have a valuation of at least 7.5 billion euros (US$10.3 billion) based on current estimates if it sold shares in Hong Kong, compared with between 5 billion euros and 6 billion euros in Milan, reports Bloomberg. To placate Italian investors, Prada, which is 95 percent owned by designer Miuccia Prada and her husband, Patrizio Bertelli, may sell some shares in Milan.
Prada could post sales of almost 2 billion euros in the fiscal year ending Jan. 31, while earnings is estimated at 500 million euros. Its Asia sales (excluding Japan) soared by 51 percent in the first nine-months of 2010.
In May, European beauty company L’Occitane listed in Hong Kong and raised about $700 million. Bloomberg reports a record HK$384.4 billion ($49 billion) was raised in IPOs last year.
photo credit: prada