China Outfitters is an excellent example of how an attractive company can come back from a failed deal. The issuer at time of writing had covered its initial public offering and was preparing to price the deal.
It was a much different outcome from the one seen in June, when the firm tried and failed to bring a US$340 million deal to the Hong Kong exchange.
That offering was pulled largely due to market conditions. The Greek crisis was in full swing then, and luggage maker Samsonite - another consumer goods company - was trading poorly at the time.
But while some deals are getting done, market conditions are not exactly pristine these days, so what has changed for China Outfitters?
First, the offering was trimmed, representing the equivalent of a more digestible US$145 million.
Second, valuation was cut, too. The revamped deal, offered at a fixed price of HK$1.64 per share, saw the company's value trimmed to a price-earnings ratio this year of about 11.5 times. (Its June listing attempt was marketed at a price-earnings ratio of 14 to 19 times.)
Third, with much of the groundwork already carried out last summer, bookbuilding and the management roadshow were slashed from the usual two weeks to just four days, to achieve as much momentum as possible with investors.