The proposed flotation of the company, founded in the 1960s by Laurence Graff (whose wealth was estimated in 2010 at US$3.2 billion by Britain's The Sunday Times) will come hot on the heels of recent listings in Hong Kong by major luxury and consumer brands.

The IPO could also be one of the largest in the territory in 2012 by an issuer not from the mainland.

The group is involved at the very top-end of the jewellery spectrum. But it is smaller, and with a narrower footprint, than Tiffany or Chow Tai Fook Jewellery, with which it will inevitably be compared. These are currently trading at price-earnings ratios in a range of about 18 to 20 times 2012 earnings.

Graff Diamonds, however, is a lower volume business. Its profits come from slowly selling an inventory (mostly diamonds). It is a higher-margin retailer that makes its money turning over gems at a significant mark-up.

In theory, the deal has a lot going for it. As a large, liquid and highly visible transaction, it is grabbing attention.

Graff Diamonds is now a global diamond and jewellery concern that spans some 30 outlets. The group's presence in Asia, however, is modest, with only five stores. Further openings are planned this year in Hangzhou and Macau - as well as at the Burj Al Arab in Dubai.

So, key to the success of the IPO - and to maximising value - will likely be the management's ability to paint a convincing Asian, and especially China, strategy and equity story.

It's also unclear at this stage which businesses will be included in the entity to be listed. The retail arm of the group posted sales of US$437 million, with a pre-tax profit of US$86 million, in 2010, according to The New York Times.

The rumoured offer size of US$1 billion equivalent suggests that other interests might be injected, although the IPO - as is often the case - could take the form of a significant raising of money through the issue of new shares. In such a case, investors will pay particular attention to the use of proceeds and the reason behind the offering.

In addition to his ownership of the retail network, Laurence Graff is the controlling shareholder of South African Diamond Corporation (SAFDICO), a diamond wholesaler with operations in South Africa, Belgium, the United States and Botswana. The group also owns a minority stake in Gem Diamonds, a company listed in London and capitalised at about US$525 million.

Given the linkages between some of these companies, it could be more practical to list the group as a whole (which would then need to comply with a slew of rules in relation to transactions with related firms).

It will also be interesting to see the market's response to Graff's gamble to list in Hong Kong, rather than in London. A number of luxury brands have flagged their interest in following Prada's footsteps (to list in Hong Kong) but few have crossed that bridge.

Chow Tai Fook's disappointing price performance since its listing last December, with the stock down 10 per cent for its IPO price, could perhaps also weigh on the outcome of the deal, especially in relation to retail investor demand.

A good early indication will be commitments made by cornerstone investors closer to launch. The lead banks will no doubt already be hard at work to canvass these - on the back of the draft prospectus.

Philippe Espinasse worked as an investment banker in the US, Europe and Asia for more than 19 years and now works as an independent consultant in Hong Kong. He is the author of IPO: A Global Guide, published by HKU Press