Samsonite offer draws lukewarm response

PUBLISHED : Thursday, 09 June, 2011, 12:00am
UPDATED : Thursday, 09 June, 2011, 12:00am

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Global brands have stepped up efforts to raise capital in Hong Kong but luggage maker Samsonite's HK$11.75 billion initial public offering has been given the cold shoulder by retail investors.

Subscription of US-based Samsonite International's public portion officially closes today but brokers said the high valuation of the company, whose core customers are travellers, had turned investors away.

Samsonite has been valued up to 26 times next year's forecast earnings, according to a pre-listing research by broker KGI Securities, which is deemed costly by some investors.

Broker Philip Securities said yesterday that there had been some withdrawals for margin financing orders for Samsonite shares, while Haitong International Securities said it had no margin financing orders for the stock.

'I think one major factor that is putting off investors is its valuation,' said Patrick Yiu Ho-yin, managing director at CASH Asset Management. 'Investors also don't like the fact that a lot of the shares come from Samsonite's major stakeholders.'

Samsonite's two biggest shareholders, CVC Capital Partners and the Royal Bank of Scotland, will collect a combined HK$962.73 million from selling 550.14 million shares in the IPO, if shares are priced at the top of the HK$13.50 to HK$17.50 range.

London-based private equity firm CVC Capital Partners bought Samsonite in 2007 for US$1.7 billion, financed by a loan from RBS.

Individual investors' participation in share sales has waned this year because of the poor performance of many new listings.

MGM China Holdings, the joint venture between Macau gaming scion Pansy Ho Chiu-king and Las Vegas casino operator MGM Resorts International, was down 1.7 per cent yesterday since its listing last week.

But bankers believe international firms will continue to flock to Hong Kong to raise funds. 'There's ongoing interest from overseas companies that want to float in Hong Kong,' said Ambrose Lam, chief executive at Investec Capital Asia, who said the bank had received queries on raising capital in the city. 'And they are looking to do decent fund raising.'