Prada Lowers IPO Expectations As Market Declines

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Posted on June 22, 2011 at 4:06 PM


Thursday, in Hong Kong, Samsonite & Prada were disappointed as their projected successes from their IPOs had setbacks.  Prada lowered its price for its listing in Hong Kong and Samsonite fell tremendously on their first trading day in HK.  These actions reflect a global trend of poor market debuts and selling across the Asia-Pacific region has set key stock indexes down by about 1.5 percent.  This global fall-out is said to have been sparked by Greece’s debt crisis as protesting and an imminent cabinet reshuffle in Athens has increased fears of continued and spreading debt.  On Wednesday the Dow Jones industrial average fell 1.5 percent and on Thursday Australia and South Korea dropped 1.9 percent.  In Hong Kong, the Hang Seng dropped 1.8 percent.  Stocks in Japan, Taiwan and mainland china have dropped between 1.5 and 2 percent.  More than anything these falls have affected the mindset and attitude of businessmen and women as they fear the financial crisis will spread.  Thursday, India had raised its key interest rate which was the 10th time since early last year that they did this.  Similarly, mainland China has tightened regulations on bank lending over the past 18 months and has raised interest rates.  As a result of the negative performances of IPOs, some companies have shelved their public offerings for the time being.  Prada lowered its price to 39.50-42.25 dollars whereas they had planned to keep it between 36.50 and 48 dollars.  Prada has projected a maximum of $2.6 billion but has recently changed its projection to $2.3 billion.  Prada is due to list on the HKSE on June 24th whereas Samsonite has been on the market and has dropped 10.6 percent already.  Samsonite, which was bought by British private equity firm CVC Capital Partners in 2007, has been previously forced to lower its price shares causing the proceeds to decrease from 1.5 billion dollars to 1.25 billion.  Despite the setbacks, the fact that both companies chose to hold a listing in the Asian financial hub demonstrates the overall shift to the Asian market.  There are about 12 non-Asian companies that are planning to list on the HKSE this year which will continue this recent financial trend.

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