Huge demand sees Belle price IPO at top end
Women's shoe maker and retailer Belle International Holdings has raised HK$8.68 billion by pricing its initial public offering at HK$6.20 per share, the top of the indicative range, after the retail portion was more than 500 times oversubscribed.
The final pricing for the 1.4 billion shares being sold on the main board is 34.1 times forecast earnings for this year, much higher than the industry average of 25 times.
Analysts believe the shares have room to rise because of overwhelming demand from investors that had led to a record HK$434 billion in funds being tied up in the offer.
'Belle could rise at least 30 per cent on its trading debut as investors are bullish on China consumer plays, especially [since Belle] is a leading player in the industry,' said a fund manager who was involved in the share offering.
Because of the strong response from retail investors, Belle boosted its retail portion to 50 per cent of the offered shares from the original 10 per cent.
The international tranche of the offer was more than 50 times oversubscribed.
Trading in Belle shares will begin on Wednesday.
The previous record for funds frozen was the HK$411 billion held by Industrial and Commercial Bank of China's US$21.9 billion dual city share sale.
China consumption plays have been very popular with investors, who see it as a way to cash in on the mainland's next stage of development.
Total consumption in the country rose 15.5 per cent during the past Golden Week to reach 320 billion yuan, the Ministry of Commerce estimates.
Luxury brands owner LVMH Moet Hennessy has agreed to buy US$30 million worth of shares of Belle as a cornerstone investor.
Lee Shau-kee also bought some shares.
The shoemaker plans to use 55 per cent of the proceeds from the share offering to acquire companies, form alliances with strategic part- ners and expand its retail outlet network.
Belle owns more than 2,800 women's footwear stores and concessionaire counters, and in excess of 1,050 sports shoe stores under the brands Belle, Teenmix, Tata and Staccato.
It is also the licensee for Joy & Peace and Bata, and is the largest mainland retailer for Nike and Adidas.
Morgan Stanley and Credit Suisse are jointly leading the deal.
