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 Prada shares gained as much as 50 cents, or 1.2 percent, to HK$40 in
the first hour of trading but closed at $39.60, just 10 cents higher
than the offering price.
The stock was widely expected to tank on its debut because of
slumping global markets and worries from Hong Kong investors that
they would have to pay Italian taxes. But while it didn't drop, it
also failed to track gains in the broader Hong Kong market as the
Hang Seng Index rebounded nearly 2 percent. The index is down 5.8
percent over the past three months.
Milan-based Prada sold 423.3 million shares, or a 16.5 percent
stake, to raise HK$16.7 billion ($2.1 billion), in its initial
public offering. The stock was priced at the low end of the offer
range.
Despite the lackluster performance, Chief Executive Officer Patrizio
Bertelli was upbeat at a listing ceremony.
"The very early trades seem to confirm the pricing was right. Signs
are very good," he said.
Prada, which also owns the Miu-Miu, Church's and Car Shoes brands,
sold 95 percent of shares to big global investors. Hong Kong
individual investors got the remaining 5 percent of shares, about
half the usual proportion.
Local investors were likely turned off by warnings in Prada's
prospectus that shareholders could be hit with Italian capital gains
tax of 12.5 percent on any profits from selling their shares as well
as up to 27 percent withholding tax on dividends. Hong Kong doesn't
tax capital gains or dividends and it doesn't have a dual-taxation
agreement with Italy.
Investors were also cool to Prada because "there are too many IPOs
happening at the same time and also the share price is generally
perceived to be quite high," said Andrew Leung, an independent
analyst.
A number of other companies have been planning Hong Kong listings,
although several have shelved or postponed them recently amid the
market's tumble. Prada is the first Italian company to go public in Hong Kong. It
follows a number of other foreign companies listing recently in Hong
Kong in hopes of cashing in on China's booming economy. It's also
aiming to raise awareness of its brand among China's growing number
of wealthy consumers.
"We are positive that the greater China region is going to be the
market of the future," Bertelli said.
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 Miuccia Prada, Bertelli's wife and the company's president and chief
designer, was not able to make it to the listing ceremony because
she was in Shanghai for a fashion show, he said.
The company was founded in 1913 by Prada's grandfather, Mario Prada,
who started out selling leather bags, trunks and crystal. Today it's
known for stylish leather handbags and classic dress designs that
have helped it become a symbol of high fashion.
The Prada family, which owned 95 percent of the company prior to the
initial public offering, will profit handsomely from the listing.
About 62 percent of the shares in the IPO came from existing stock
they owned, reaping them about $1.3 billion before fees. Another 24
percent came from Italian bank Intesa Sanpaolo's stake, which owned
5 percent.
The remaining 14 percent comes from new shares that will raise about
$270 million after fees for the company. Most of the money will be
used to open more stores or expand existing ones and pay off debt.
Prada had discussed going public several times in the past, with the
most recent attempt delayed after the world financial crisis in 2008
sent markets tumbling.
Swiss commodities trader Glencore International and luggage maker
Samsonite International S.A. have also listed in Hong Kong this
year, while luxury handbag maker Coach, which is already listed in
New York, has selected Hong Kong for its second listing.
[Associated
Press; By KELVIN CHAN]
Copyright 2011 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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