Italian fashion house struggles to make an impact on Hong Kong stock market debut
Prada's stock market debut in Hong Kong on Friday fell as flat as wearing last season's outfit at Ascot.
Shares in the Italian fashion house gained as much as 50 cents, or 1.2%, to HK$40 (�3.20) in the first hour of trading in Hong Kong but, by mid-afternoon, the stock was changing hands at $39.55, just five cents higher than the offer price.
The stock was expected to fall on its debut because of tumbling global markets and worries from Hong Kong investors that they would have to pay Italian taxes. But while it did not drop, it failed to track gains in the Hong Kong market where the Hang Seng index was up 1.7%.
Even so, Prada chief executive Patrizio Bertelli was upbeat at the listing ceremony. "The very early trades seem to confirm the pricing was right. Signs are very good," he said.
City experts begged to differ, though. "A 0.1% gain on the first day of trading is not an impressive debut even given wobbly markets ? and especially given that the stock was already priced at the low end of the range," said Louise Cooper of brokerage BGC Partners. "In the same way that a great company does not always make a great stock, a fabulous product does not always ensure good returns to shareholders.
"The majority of the shares floated (62%) came from the family and investors always worry when insiders sell. If it's such a great story, why are those who are running the business selling out?"
Only 14% of the �1.3bn float is new shares, raising �170m to be used to invest.
Milan-based Prada sold 423.3m shares, or a 16.5% stake, to raise HK$16.7bn.
The maker of Miu Miu dresses and luxury handbags is the first Italian company to float in Hong Kong. It followed in the footsteps of other foreign companies listing in Asia, such as luggage maker Samsonite, in the hope of cashing in on China's booming economy and an appetite for western luxury brands among China's growing number of wealthy consumers.
The float was overshadowed by protests staged by women's rights groups on Thursday, who accused Prada of sexual discrimination. Two dozen activists chanted "Down down Prada! The Devil is Prada! No listing of Prada! Shame on you Prada!" as they demonstrated outside a Prada store in a busy shopping district in Hong Kong.
The protest was sparked by the dismissal of Rina Bovrisse, a former Prada manager in Japan who claimed she was unfairly fired in March 2010 after being told by a company executive she was "ugly" and didn't have "the Prada look".
"I'm here today to stand up for women who have been victims of harassment and discrimination at the workplace," said Bovrisse, who flew to Hong Kong for the protest and asked investors to "think twice" before investing in Prada.
Source: http://www.guardian.co.uk/business/2011/jun/24/prada-struggles-hong-kong-market
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