Graff IPO may fund expansion

PUBLISHED : Monday, 21 November, 2011, 12:00am
UPDATED : Monday, 21 November, 2011, 12:00am


Graff Diamonds says it may use proceeds from a listing in Hong Kong to expand in Asia by doubling its shops in the region.

Brokers said the London-based jeweller planned to list in Hong Kong next year to raise about US$1 billion. Local jewellery shop Chow Tai Fook is also holding roadshows on the initial public offering (IPO).

Laurence Graff, chairman and founder of Graff Diamonds, said his company was considering a listing, but details and the timetable had not yet been fixed.

'If we do have an IPO in Hong Kong, the funds raised would be used mainly to expand our Asian business, as that is going to be the fastest-growing region worldwide,' Graff said in his flagship Hong Kong shop at The Peninsula hotel.

Graff Diamonds is involved in manufacturing, wholesaling and retailing of high-end diamond jewellery worth at least US$10,000 each. The top item in its store, Constellation, a round diamond of 102.79 carats, is worth about US$50 million.

Graff's son Francois, the managing director, said that if the company decided on a listing, Hong Kong was a natural choice.

'Hong Kong has a free and established market. It is also close to the mainland and other major cities where our major clients are based.'

Graff wants to double the number of its shops in Asia in the next few years. It has shops in Beijing, Shanghai, Hong Kong, Tokyo and Taipei, and will open outlets in Macau and Hangzhou next year. Francois Graff also wants to open a street-level shop in Hong Kong in addition to the one at The Peninsula. 'Our business and expansion plan is not affected by the global financial crisis as our clients are high-net-worth clients who can cope with the crisis,' he said.

Laurence Graff is optimistic about the future of the diamond trade in Asia, saying the rising numbers of millionaires was increasing demand for diamonds.

'If 10 per cent of China's 1.3 billion population bought diamonds, there would be none left in the world,' he said. He added that the lack of supply concerned him, given that no new diamond mine had been discovered for 10 years. As such, he believes diamond prices will continue to go up.

While the Chinese community tends to prize gold, Laurence Graff believes mainlanders will take up the Western custom of buying diamonds for wedding or engagement rings.

'A diamond is a family treasure, as it can be passed on to children and grandchildren. Diamonds would be the last thing you would throw away.'

Haywood Cheung Tak-hay, president of the Chinese Gold & Silver Exchange Society, said more Chinese were buying diamonds but he expected gold to remain their top choice for dowries and gifts.

Joseph Tong Tang, executive director of Sun Hung Kai Financial, said Chinese were increasingly investing in diamonds as a result of Western influence.