Thursday, May 31, 2012

Graff Diamonds pulls HK IPO on failing investor demand

LONDON-BASED jeweller Graff Diamonds said that it had decided to postpone its $US1 billion initial public offering (IPO) in Hong Kong owing to adverse market conditions that hurt demand.
Graff's is the largest IPO to be withdrawn in Asia so far this year, amid a string of pulled share sales in recent days. Car dealer China Yongda Automobiles Services Holdings shelved its Hong Kong IPO earlier this week, which had been expected to be worth up to $433 million, while mining firm China Nonferrous Mining postponed its $313 million deal. In Singapore, M&L Hospitality Trusts called off its IPO last month.
The IPO of the ultra high-end jeweller founded by Laurence Graff in 1960 was being closely watched as the company is set to be the latest foreign firm to list in Hong Kong after Italian luxury house Prada went public in the city.
Hong Kong was the world's top venue for IPOs in the last three years, but so far this year, the $US1.8 billion offering by Chinese brokerage Haitong Securities has been the city's top deal. Graff's IPO had been seen as a high-profile test of investor appetite new shares.
But concerns about Europe's debt crisis and weak market performances have been hurting investor appetite for new listings. Hong Kong's benchmark Hang Seng Index is down more than 10 per cent this month.
According to reports, Graff managed to obtain orders for only half of the shares that it intended to offer.
The postponement of Graff's IPO also comes as diamond ring specialist Tiffany & Co cut its outlook for the year, citing lower sales growth in the US.
"The company enjoyed high quality engagement on its business and strategy from a very broad range of prospective investors. However, consistently declining stock markets proved to be a significant barrier to executing the transaction at this time," Graff said in a press release.
Graff had priced its shares at $HK25 to $HK37 each, translating to 18 to 24-times 2012 forecast earnings and valuing the company at up to $US4 billion.
The company had been due scheduled to price the deal on Friday and to list on the Hong Kong stock exchange on June 7.
Rothschild is the financial advisor on the Graff IPO, while Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC and Morgan Stanley were bookrunners.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.