As the weather is heating up for summer, so business prospects are heating up in Hong Kong, where several luxury brands are in the process of—or preparing for—initial public offerings (IPOs) on this investor-rich island. And no wonder: China’s luxury goods market has seen double-digit growth this year, and, according to a study by consulting firm Bain & Co., in the next five years will grow to be the world’s third-largest luxury goods market.
Milan Station Holdings kicked off the IPO storm recently. This second-hand luxury handbag retailer, founded by Hong Kong businessman Yiu Kwan Tat, increased 66 percent during its offering. The offering began at HK$1.67 per share, peaked at HK$2.96, and settled to $2.77 by the end of the trading day. While the company originally intended to offer 10 percent of its IPO to retail investors, this figure was oversubscribed—demand exceeded shares available—2,178.5 times. In light of this frenzy, the company increased its proportion of retail investors to 50 percent of the IPO.
Chow Tai Fook likely hopes to share in the enthusiasm that greeted Milan Station Holdings. This local Hong Kong jewelry retailer hopes to raise between $3 million and $4 million in a first-quarter 2012 public offering in Hong Kong.
But not only local companies are getting in on the IPO action. Perhaps one of the most recognizable names in the frenzy of upcoming IPOs is Prada SpA. Prada recorded sales of $2.9 billion last year, a 31 percent increase in revenue from the previous year that doubled Prada’s profits. Prada plans to begin its public offering on June 14 in Hong Kong, and is set to sell over 423 million shares.
Samsonite Corp. plans to open its $1 billion IPO to Hong Kong investors on June 16. Other foreign retailers with upcoming plans to list in Hong Kong include Baroque Japan Ltd., a Japanese clothing retailer, and Sun Art Retail Group Ltd., a hypermarket joint venture between French and Taiwanese companies.
A part of the Beijing municipal government, Beijing Jingneng Clean Energy Company plans to launch an IPO in July. The clean-energy unit hopes to raise US$500 million to US$700 million through the IPO.