Why does Prada IPO in Hongkong？
Why did Prada IPO in HONG KONG?
Prada is joining the parade of foreign companies listing in Hong Kong rather than their home markets. As the only Chinese exchange fully open to foreign investors, Hong Kong has benefited as global investors shift more funds toward China and other emerging markets in search of better returns than they can find in the developed world, for three main reasons.
1) Listing in Hong Kong provides access to otherwise unreachable Chinese investors and moreover can serve as a useful branding exercise for firms growing into the Asian and Chinese markets.. A McKinsey study predicts that over the next 50 years the developing world will contribute more to global GDP growth than the developed world, something that hasn't happened for 200 years. And the center of the developing world, for now at least, is in East Asia. Chinese institutional investors make up around 5% of turnover, while the Hong Kong market also contains a large amount of retail investors at 35% of turnover.
2) Better valuations. Eric Landheer, Head of Issuer Marketing at Hong Kong Exchanges and Clearing (HKEx), notes the range of reasons drawing investors to the territory, in particular the market’s “great valuations which are often the envy of other exchanges around the world”. He adds that the high degree of liquidity and efficiency make it ideal for raising follow-on funds. In 2011, examples of high Price-Earnings ratios included Prada at 36x, L’Occitane at 25x and Sun Art Retail at 42x.
3) Hong Kong is also at present the only viable offshore centre for renminbi equity fund raising, useful for firms seeking to invest or expand in the mainland market.
Sources:
J.P. Morgan Depositary Receipts - Strategic Thinking for HK IPOs
Prada’s I.P.O. Debuts in Hong Kong Amid Investor Jitters, BETTINA WASSENER
Client is not necessarily investor.
Plus: trap the market
For shareholders who want to sell shares. HK
PRI: political risk insurance. Premium to cover p r.
A4
1. Large E in
Prada is joining the parade of foreign companies listing in Hong Kong rather than their home markets. As the only Chinese exchange fully open to foreign investors, Hong Kong has benefited as global investors shift more funds toward China and other emerging markets in search of better returns than they can find in the developed world, for three main reasons.
1) Listing in Hong Kong provides access to otherwise unreachable Chinese investors and moreover can serve as a useful branding exercise for firms growing into the Asian and Chinese markets.. A McKinsey study predicts that over the next 50 years the developing world will contribute more to global GDP growth than the developed world, something that hasn't happened for 200 years. And the center of the developing world, for now at least, is in East Asia. Chinese institutional investors make up around 5% of turnover, while the Hong Kong market also contains a large amount of retail investors at 35% of turnover.
2) Better valuations. Eric Landheer, Head of Issuer Marketing at Hong Kong Exchanges and Clearing (HKEx), notes the range of reasons drawing investors to the territory, in particular the market’s “great valuations which are often the envy of other exchanges around the world”. He adds that the high degree of liquidity and efficiency make it ideal for raising follow-on funds. In 2011, examples of high Price-Earnings ratios included Prada at 36x, L’Occitane at 25x and Sun Art Retail at 42x.
3) Hong Kong is also at present the only viable offshore centre for renminbi equity fund raising, useful for firms seeking to invest or expand in the mainland market.
Sources:
J.P. Morgan Depositary Receipts - Strategic Thinking for HK IPOs
Prada’s I.P.O. Debuts in Hong Kong Amid Investor Jitters, BETTINA WASSENER
Client is not necessarily investor.
Plus: trap the market
For shareholders who want to sell shares. HK
PRI: political risk insurance. Premium to cover p r.
A4
1. Large E in