World's largest jeweller set to launch IPO

The name Chow Tai Fook Group may be relatively unknown amongst westerners, but that is soon to change.

The largest jeweller in the world believes it’s time to branch out further by launching an IPO in Hong Kong shortly.

Nasdaq reports that the IPO would value Chow Tai Fook at least 50 per cent above Tiffany & Co.

The sale targets almost double the amount raised by Milan-based Prada SpA in the biggest IPO this year in Hong Kong, where surging disposable income in China has helped drive monthly retail sales to a record. Businessweek.com reports that the jewellery unit may be valued as high as seven times annual revenue, double what LVMH paid to buy out Bulgari and triple Tiffany & Co.’s market capitalisation.

According to The Wall Street Journal, it is potentially the world’s biggest IPO since Spain’s Banksia SA listed in July. This will surpass the impressive Prada, Samsonite and Salvatore Ferragamo IPOs that have consumed both the luxury and business world this year.

The Chinese are traditionally known to be real admirers of gold and diamonds, which has made the Chow Tai Fook Group successful in its own right. The 80-year-old company is planning to sell 1.05 billion shares when it kicks off the roadshow on November 28.

The company, which at the base deal will be raising up to $US3 billion ahead of a listing on December 15 in Hong Kong, has the option of selling an added 15 per cent, up to $US450 million, if there is enough demand.

With 1,500 stores in Asia, which are mostly found in China alone plan to use the proceeds from the IPO to source new materials and inventory, repay pre-IPO loans used to make dividends ahead of the IPO, to refurbish and purchase point-of-sales outlets and to build a new office in Shenzhen.

In a world that is still somewhat volatile when it comes to financial markets, it is deemed as a gamble, but with Asia being the luxury hub of the universe at present, it could be a case of now or never…

Image credit: thetravelingrichters.com

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