By  on October 29, 2007

MILAN — Italian jeweler Damiani SpA began an initial public offering Friday that could generate as much as 150.8 million euros, or $215.4 million at current exchange.

Damiani family members are selling 26.36 million shares, or about 31.9 percent of their company, in the offer. If demand is high enough, another 2.64 million shares will go on sale through an overallotment option, known as a greenshoe. Shares will start trading Nov. 8 on the Milan stock exchange's STAR segment for small companies.

"We are among the world's big players [in jewelry] and definitely we want to take advantage of the opportunities out there and grow," president and chief executive officer Guido Damiani said.

The company will use the IPO's proceeds to build a new production facility and open more stores for its portfolio of jewelry brands, he said. Damiani does more than 86 percent of its business through retail channels, although it also has a network of 54 signature stores, including boutiques in Milan, Rome, Paris, New York and Tokyo. Damiani does 76 percent of its business in Italy.

The offer, which runs through Friday, has a preliminary price range of 3.8 euros to 5.2 euros per share, or $5.43 to $7.43. That range values the company at 243.7 million euros to 333.5 million euros, or $348.9 million to $476.36 million. The final IPO price will be set Friday. Unicredit and Merrill Lynch International are coordinating the offer.

Guido Damiani said the company isn't planning any acquisitions, but wants to be in a strong position to consider any future opportunities. Consolidation is under way in the jewelry industry, which is filled with small and medium-size players.

"If we came across a good opportunity, we would not be scared to pursue it," he said. "We would evaluate it."

Damiani bought niche jeweler Alfieri & St. John in 1998. Last year, it purchased high-end jeweler Calderoni 1840. In 2002, a Damiani family holding company bought 18 percent of Pomellato, a move some industry experts questioned since Damiani has no input on Pomellato's strategy as a minority investor.

Guido Damiani said he is happy with the status quo for he moment. "If one day the [Pomellato] is for sale, we will evaluate it," he said.The Damiani IPO will help gauge investors' appetite for luxury goods stocks ahead of what is shaping up to be a potential rush to market. Aeffe SpA, the corporate parent of Alberta Ferretti and Moschino, went public in July, although its share performance has been less than stellar. Salvatore Ferragamo SpA and Prada SpA are expected to go public next year.

Damiani, which has featured celebrities such as Jennifer Aniston, Brad Pitt and Gwyneth Paltrow in its ads, also produces Salvini, a more accessibly priced line, and Bliss, a youth-oriented collection featuring gold and steel items.

For the year ended March 31, Damiani's net profit grew 33.9 percent to 14 million euros, or $18 million at average rates for the period. Operating profit gained 25.3 percent to 24.8 million euros, or $31.8 million. Sales for the period were up 1.1 percent to 168 million euros, or $215 million. In its prospectus, Damiani said a 2005 inventory sale and the closing of a Salvini store made the 2005-2006 fiscal year an atypical one for comparison.

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