American luxury brand Coach is set to become the first US-incorporated firm to list in Hong Kong.
It will list Hong Kong Depositary Receipts (HDR) by way of introduction tomorrow.
Coach will retain its primary listing in New York and it said no new stock or capital will be raised through the Hong Kong listing.
The Madison Bag is Coach’s best-selling women’s handbag and sought after by many young professionals.
But Coach is looking beyond America and wants to create more brand awareness with Asian investors.
The New York-listed handbag maker will issue up to 293 million share of depositary receipts in Hong Kong tomorrow.
Lew Frankfort, CEO of Coach, said: “This year we estimate both consumers in China and outside China will approach 8-10 per cent of our overall sales. We do believe over the next 3-5 years, that will grow to 20 per cent. We are opening stores rapidly. This year alone, we are opening 30 stores in Greater China, growing our stores from 65 to nearly 100.”
Hong Kong is becoming a natural magnet for luxury brands to list here with a bid to get exposure into China. More recently, Italian fashion house Prada, luggage maker Samsonite and French cosmetics chain L’Occitane all listed here.
Some watchers said the HDRs would not do well, as trading volumes for Hong Kong’s two other HDRs – Brazilian mining giant Vale and Japanese online broker SBI Holdings – haven’t been strong.
But the lead sponsor for Coach remains unfazed.
Mac El-Omari, managing director of JP Morgan, said: “The two companies that you’re referring to are actually in a different category. This is the first time that we’re offering an opportunity for local investors to participate in an affordable luxury brand and have them invest in this HDR programme.”
China is set to surpass Japan as its number two market in the next few years.
Coach’s biggest market is still the US, helping the group to achieve earnings of US$880 million last year.