The listing of Prada stocks at the Hong Kong Stock Exchange through an IPO has been in the pipeline for some time now. It has been a major point of discussion in the fashion as well as financial circles. The Italian fashion brand is taking a decisive step that will determine the future course of the group. The IPO that they have planned would perhaps be the largest floatation by any group or company in the fashion and luxury industry. The process of listing which was initiated by the company a few months back is heading towards its climax on June 17 when they will launch the IPO and announce its price band for the prospective investors. The fashion house is confident that they can raise up to $2.6 billion through their Hong Kong IPO as they are expecting a listing price of HK$36.5 to $48 for a share. They estimate that their IPO will be subscribed at a significant premium which will not only allow them to raise an unprecedented amount as equity but boost the valuation of the company to levels which would be much higher than its European peers.
If the listing and the Hong Kong IPO goes through successfully as per their estimates, the valuation of the company will zoom to $15.3 billion. It will become the most valuable luxury goods company, leaving behind such giants as the France based Louis Vuitton Moet Hennessy which is the largest and most powerful luxury goods conglomerate. The finance raised through the IPO will help Prada to grow even faster and enable it to rollout its expansion plan aggressively. The growth story in the luxury industry is centered on China and the Eastern region and naturally the expansion plans of Prada are also focused on the Asian market. Only Japan, which is already a mature luxury market, has tripped up because of the earth quake and its aftereffects. With almost $3 billion in its kitty Prada will be in a position to implement any lavish plan or program it chooses to implement. The listing at Hong Kong stock exchange will also strengthen the connect the luxury brand has with the Chinese consumers and help it on reaching out to them.
The senior managers of the company and the bankers who are managing the IPO were in meetings with potential investors in Singapore yesterday. The high powered group will be traveling to other capitals including Hong Kong, London, Milan and New York, to tap the potential investors. However, Prada opted for the Hong Kong Stock Exchange instead of the European market in recognition of the importance of Asian consumers. It is they, after all, who are propelling the growth in the luxury goods industry. Women’s Wear Daily, the fashion trade paper, who had access to the 450 page term sheet filed by Prada with the Hong Kong Stock Exchange, revealed that Miuccia Prada, and her husband, Patrizio Bertelli, Prada’s CEO are the largest shareholders in the company and own 33.2% stakes each in the company. They had received a remuneration of€9.7 million and €10 million, respectively, last year, making them among the most highly paid people in international fashion. This IPO will dilute their holding in the company to a certain extent but give them to earn more profits against their shareholding.
