Shares in Italian fashion house Prada rose as much as 1.3 percent on their first trading day, defying expectations for a weak start and auguring well for the Milan debut of smaller peer Ferragamo. Prada, the maker of luxury bags and Miu Miu dresses, raised $2.14 billion in the initial public offering (IPO) after pricing it at the bottom of a revised indicative range.
Shares in the Milan-based company traded as high as HK$40 on Friday as investors who could not buy into the Hong Kong IPO snapped up the stock in a buoyant market, before closing just above its HK$39.50 listing price at HK$39.60. It is only the second company to post first-day gains among billion dollar-plus IPOs in Hong Kong this year, after MGM China, which rose a tepid 1.8 percent.
Prada's positive debut bodes well for Italian luxury leather goods maker Salvatore Ferragamo, which defied a tough European IPO market to price its 344 million euro ($486.8 million) Milan listing at 9 euros per share on Thursday, and begins trading on June 29. "Luxury brands do have appeal. There is emerging market growth, margins are high and there is pricing power," said Scilla Huang Sun, head of equities at Swiss and Global Asset Management, who bought into the Ferragamo offering.
Many other consumer-focused companies are exploring Hong Kong listings as part of a trend to raise brand awareness in China, the world's fastest growing luxury market, and Prada's after-market performance will be critical in attracting such companies to Asia's IPO hub.
Prada, set up in 1913 by Mario Prada as a business selling leather bags, trunks and silverware to the European elite, has become a global fashion empire, with 319 directly operated stores, a third of which are in Asia-Pacific.