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IPO

IPO

Chinese-owned French fashion retailer SMCP fails to impress in Paris market debut

SMCP sees stronger demand for its brands in China because of a growing middle class and will use IPO proceeds to repay debt and step up expansion plans globally

PUBLISHED : Friday, 20 October, 2017, 7:04pm
UPDATED : Friday, 20 October, 2017, 7:04pm

French fashion firm SMCP, owned by Chinese textiles giant Shandong Ruyi Technology Group, made a disappointing stock market debut in Paris on Friday.

Shares of the owner of Sandro, Maje, Claudie Pierlot fashion brands opened flat at its IPO price of 22 euros and fell 3 per cent to 21.34 euros in early trading. Based on the share price, SMCP’s market cap was nearly 1.7 billion euros.

The IPO raised around 541 million euros (US$650.2 million) for the company and its shareholders.

KKR got 148 million euros, and certain managers of the group bagged 5.9 million euros. Shandong Ruyi received 261 million euros.

The total raised funds could increase to 623 million euros if the over-allotment option is exercised in full.

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SMCP said it will use the proceeds to pursue its development and growth strategy and to repay its debt. The company said it will continue “expansion in Greater China, accelerate store network development, boost digital and build brand awareness”.

The company said it aims to become a leader in the accessible luxury segment and attract more Chinese customers, as China sees stronger demand for luxury fashion products because of a growing middle class.

In April 2016, Shandong Ruyi bought a controlling stake in SMCP for 1.3 billion euros in one of the largest overseas acquisition deals in China’s fashion industry. After the acquisition, SMCP stepped up its global expansion plans, especially in China’s e-commerce sector.

The same year, SMCP launched two online stores on Alibaba’s Tmall.com for Sandro and Maje brands separately, which helped to support a nearly 80 per cent jump in its total e-commerce sales for 2016.

SMCP also opened stores in Shanghai, Chengdu, Shenzhen, and two flagship stores in Hong Kong’s Fashion Walk shopping centre last year.

In 2016, SMCP’s total sales increased 16 per cent from a year earlier to 786 million euros. International sales rose 24 per cent, accounting for 54 per cent of its global turnover.

JPMorgan, Bank of America Merrill Lynch and KKR Capital Markets were joint global coordinators and joint bookrunners on the IPO.

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