Prada HK listing to set trend for fashion brands in Europe
Hong Kong is expected to become a favoured fund-raising destination for more European fashion companies following Italian luxury brand Prada's decision to list in the city, analysts say.
Prada, which has said it wants to raise up to Euro1.5 billion (HK$16.04 billion), confirmed on Thursday it would go ahead with a share offering in Hong Kong as rising incomes on the mainland spurred demand for luxury goods.
However, it did not say how much it is raising or whether shares will be sold to the public. A spokeswoman for Prada Hong Kong said details of the offering would be released later.
The Milan-based company, which also owns the Miu Miu, Car Shoe and Church's brands, said funds raised from the share offering would be used to expand its retail network, increase production lines and reduce debt.
Prada will be the first global luxury brand to list in Hong Kong and analysts expect more to follow.
Kenny Tang Sing-hing, the head of research at Redford Securities, said investors in Hong Kong were prepared to pay a higher premium for big fashion companies such as Prada as they were generally positive about the luxury goods market in Asia, particularly China.
'There's no doubt that Prada's listing will be well received,' Tang said. 'This will also show other European brands that Hong Kong is a good option [for fund-raising] with its strong liquidity and high stock valuation.'
Helena Liu, an analyst with Bocom International Securities, said Prada's decision would influence other players in the industry.
'If Prada, the world's leading luxury brand, can make it, it will prove to other European brands that an initial public offering in a remote city like Hong Kong can work,' Liu said.
Italian fashion retailer Sixty Group, which owns the high-end casual wear brand Miss Sixty, is also one of those interested in a listing. It is seeking about US$75 million to expand its presence on the mainland.
Paolo Bodo, the chief executive of Sixty Far East, said a number of fashion companies in Italy were similarly interested in listing in Hong Kong.
A recent report by Goldman Sachs said the sales proceeds of China's luxury goods market reached US$6.5 billion last year, amounting to 15 per cent of the global market.
The number of luxury goods shoppers would rise from 40 million now to 160 million in five years and China would replace Japan as the biggest luxury goods consumer in three years, it said.
Prada has said it expects global sales of about Euro2 billion for last year, with about 40 per cent coming from Asia.
A family business founded by Mario Prada in 1913, Prada is now controlled by chief executive Patrizio Bertelli, his wife Miuccia Prada and her family. It has tried to go public three times over the past decade but had to scrap the plan every time because of adverse market conditions.
Booming market
High-end fashion retailers to cash in on mainland demand
The amount, in HK dollars, Prada has said it wants to raise through its share offering to help finance its expansion: $16b
