Over the last fortnight, two of the Italian fashion industry’s brightest stars made their debut on a public stock exchange. Prada SpA floated 16.5% of their equity on the Hong Kong Stock Exchange and Borsa Italiana accommodated the initial public offering of Salvatore Ferragamo SpA, which sold 22.7% of their shareholdings.
A few weeks ago we questioned and discussed the merits of Prada’s HKEx listing. Over the past few days we have observed how the results of this maverick move compared against Ferragamo’s conservative strategy to list on their native stock exchange. So two weeks down the line – how have these two Italian power houses fared?
Days of public trading*: 5
Closing price**: 44.9500 HKD / 5.7769 USD
Gain/(Loss) on IPO price: 13.80%
The June Prada debut was what one could call lukewarm. Though it defied its critics by managing to maintain a comfortable average gain of approximately 10% on its IPO price (we can be happy about this – I will explain later), this consistent performance has also been perceived as “disappointing” given the hype surrounding the event.
Leading up to the Prada IPO, all we heard and read about was Prada or something related to it so it was no surprise that this performance felt rather anti-climatic. Kind of that feeling you may get when you finally find on an online boutique a pair of Valentino Nappa leather platform pumps – in your size – and in that perfect lipstick-red shade, only to realize when it arrives in your mailbox that the colour is slightly off what you expected; or the shoes just pinch the sides of your toes. It will do of course, but it wasn’t the beginning of the love affair which you had anticipated. (NB: As much as I wish this were from personal experience, it is not.)
Amidst all the mixed emotions and disappointed reviews, it needs to be highlighted that the Prada IPO still attracted subscribers five times over what was required. This means that during the subscription period, where an investor applied to purchase five shares, they were eventually only allotted one due to this ‘oversubscription’ situation. (subscription period: This is the period prior to the IPO date where potential investors will mail in their chunky, healthy cheques in application for a parcel of shares. On the day of the IPO they will be ‘allotted’ these shares and will have effectively purchased the shares.)
As appropriately voiced by the International Herald Tribune’s Luxury Conference (via Twitter), the “Prada IPO (is) still 5th biggest this year, raising $2.1Bn & is (a) key moment for HK /Asia/luxury”.
Days of public trading*: 3
Closing price**: 10.4900 EUR / 15.2560 USD
Gain/(Loss) on IPO price: 16.56%
Trailing under the shadow of the Prada madness is the quiet triumph of the Salvatore Ferragamo IPO on the Milan-based stock exchange.
Floating at 9EUR per share, the Ferragamo IPO raised a reported EUR344 million (USD496 million; AUD 464million). This may raise an eyebrow as it is not quite within the league of the amount of capital raised via the Prada IPO however let’s be real – it is still a successful amount of money raised. How many pairs of the classic Ferragamo ‘Invisible Sandals’ can that buy? A lot.
In addition to the impressive debut, as at 5th July 2011, the company’s stocks have maintained a healthy average gain of around 13%.
* The shares in Prada and Ferragamo have only been publicly traded for five and three days (as at 4 July 2011) respectively, so there is no concrete consideration that all will be well. In comparison to the performance of L’Occitane’s IPO on the HKEx last year however, it is apparent that the performance of Prada and Ferragamo are clearly less volatile.
Though it is still very premature to comment decisively, neither Prada nor Ferragamo have provided us absolute disasters to report on.
** Closing market prices as at 4 July 2011.
Images: Stock exchange charts from Bloomberg.
By Heidy Suwidji – a financial accounting analyst and all-round fashionholic, you can catch her keeping one keen eye on the latest fashionably corporate news, and the other on her favourite online shopping sites. Follow her on Twitter at @lolaswij.