By and  on June 12, 2011

HONG KONG — During a fittingly East-meets-West afternoon tea complete with Chinese dim sum and Italian pastries, Prada on Sunday outlined the financial details of its long-awaited initial public offering, which could raise as much as $2.61 billion.




Executives from the company’s board spoke by video conference from Milan and only took a handful of questions from the journalists assembled at the Shangri-La hotel here.

The shares will be priced between 36.50 and 48 Hong Kong dollars each, or $4.69 and $6.17 at current exchange, in line with expectations and previous reports. The company will sell 423.3 million shares, or nearly 17 percent of its capital. If the IPO is priced at the top end of that range, the company would raise as much as 20.32 billion Hong Kong dollars, or $2.61 billion.

The final share price will be determined on June 17 and the stock will start trading on the exchange June 24 under the stock symbol 1913 — a nod to the year of the company’s founding.

“Our decision to go public in Hong Kong shows our interest in Asia today and in Asia as it will be in the future,” said Prada chief executive officer Patrizio Bertelli, flanked by members of his management team. “I’m confident we’ve made the right decision.”

Last week and this week, the company is holding road show presentations in Singapore, Hong Kong, London, Milan and New York. But the real buzz has been in Hong Kong, where Prada billboards are ubiquitous and the entire town is talking about the year’s most luxurious IPO. Bertelli pointed out that Prada is the first luxury fashion brand and the first Italian company to go public in Hong Kong. But even that prospect might not be enough to offset what some observers consider a high asking price.

At the top of the price range, the offer values the company at $15.8 billion. That is about 28 times Prada’s 2011 expected net profit of 400 million euros, or about $574 million. When asked about the logic behind such a high price, Prada vice president Carlo Mazzi brushed aside any potential concerns.

“We’re not worried, we’re just tired from the road show.” he quipped. “The price reflects the value of the company. As for speculation that it’s expensive, we don’t comment, but we don’t share this opinion. The market can decide if it’s a fair price.”

As reporters delved into details, Bertelli bristled at questions about remuneration, specifically a revelation that creative director and group president Miuccia Prada earned 9.7 million euros, or $13.9 million, and Bertelli himself pocketed 10 million euros, or $14.3 million, for their work last year.

As Bertelli began to reply, Mazzi pointed out that these are the heads of design and business for a major corporation.

“You can consider and compare to other companies in the luxury sector,” he interjected. “These compensations are in line with others. There is no problem regarding this point. At the end of the day, it’s paid by the company and the results of the company’s [performance] are what you can see.”

Still, the figures from two of the industry’s biggest publicly listed companies tell a different story, as Prada and Bertelli were each paid more than double what either LVMH Moët Hennessy Louis Vuitton chairman and ceo Bernard Arnault or PPR chief François-Henri Pinault earned.

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