Italian luxury fashion house Prada made a lackluster stock market debut in Hong Kong this morning amid choppy global markets and waning investor interest after a string of blockbuster IPOs.
The family-controlled firm’s stock opened just 0.25 per cent higher at HK$39.60 (US$5.08) compared to its initial public offering (IPO) price of HK$39.50.
Prada shares were trading at HK$40.00 shortly after the opening, while Hong Kong’s benchmark Hang Seng index opened 0.39 per cent higher on Friday.
“We are the first Italian luxury brand company to list here and this is a landmark event for the Hong Kong stock exchange,” chief executive Patrizio Bertelli told reporters.
“I am positive the Greater China market will be an interesting market for luxury good brands. The first signs are very good,” he said.
The Italian group, which includes the Prada, Miu Miu, Church’s and Car Shoe brands, is the latest high-end fashion brand to tap the huge Chinese market, the world’s fastest-growing market for luxury goods.
China is forecast to be the world’s top buyer of products such as cosmetics, handbags, watches, shoes and clothes by 2015, according to consultancy PriceWaterhouseCoopers.
But weak market sentiment pushed Prada to price its Hong Kong shares at the lower end of its price range and shrink the size of its highly anticipated IPO, raising a lower-than-expected US$2.14 billion.
Prada sold 423.2 million shares after floating 20 per cent of its stock. Before the IPO, the brand had been 95 per cent owned by the Prada family and executives.
The top end of Prada’s price range would have seen the firm raise about US$2.6 billion in Hong Kong, before any option to issue extra shares which could have pushed the deal to US$3.0 billion in all.
But analysts said many investors were concerned that Prada’s stock was overpriced, and were deterred by a tax hurdle in Italy that could shrink foreigners’ profit owing to the absence of a tax treaty with Hong Kong.
China’s deep capital pool helped Hong Kong claim the title of the world’s biggest IPO market in 2010 — for the second year in a row.
Firms raised more than US$50 billion in Hong Kong IPOs last year, making it the world’s biggest market for new listings including two monster sales by Asian insurer AIA and Agricultural Bank of China.
Luggage maker Samsonite had a poor trading debut in Hong Kong last week with its shares closing nearly eight percent below their IPO price.
And Prada received some unwanted publicity on Thursday when two dozen women’s rights activists staged a protest outside one of its Hong Kong stores, accusing the group of sexual discrimination and chanting “The Devil is Prada! No listing of Prada!”
The protest stemmed from the case of Rina Bovrisse, a former Prada manager in Japan who claimed she was unfairly fired in March last year after being told by a company executive that she was “ugly” and didn’t have “the Prada look”.