Graff Diamonds, the London-based jeweler known for some of the world’s most expensive diamond jewelry, is planning to raise as much as $1 billion via an initial public offering, possibly in Hong Kong, according to a person familiar with the situation.
The family-owned company hasn’t yet settled on Hong Kong as a listing location, but it is focused on the market, the source said, adding that proceeds from the listing will likely be used for expansion in the region. Asia is Graff’s fastest-growing market and the jeweler has stores in Hong Kong, Beijing, Shanghai, Tokyo and Taipei. The company plans to open additional stores next year in Macau and Hangzhou, China. Read About Graff's West Coast Expansion Here >>
The group is expected to post sales of about $800 million in 2011. Rothschild is advising on the listing, and an industry source said Graff went to the book runners, or lead underwriters, Wednesday. A Graff spokesman in London declined to comment.
“This is yet another example of a Western brand seeking to list its shares on a Far Eastern stock market where it believes that it will not only achieve a higher valuation, but it will also gain good p.r. in an increasingly important market for its products,” said Chris Searle, corporate finance partner at London accountants BDO LLP.
“It’s another sign of the shift in economic power to the high-growth Far East from the stagnant West,” added Searle. “Although the U.S. is still the largest market for diamonds, it can’t be too long before it will be overtaken by China. It thus makes sense for a company like Graff to list in Hong Kong, which has seen a boom in listings recently. Whether the path forged by Graff is followed by diamond producers remains to be seen given London’s attraction for mining companies.”
Graff’s decision comes on the heels of another megadeal for the diamond industry. On Friday, Anglo-American revealed its purchase of the Oppenheimer family’s 40 percent stake in De Beers. The $5.1 billion purchase boosts Anglo American’s stake in the diamond mining company to 85 percent, and consolidates its ownership at a time when demand for diamonds is flourishing.
Founded in 1960 by Laurence Graff, Graff Diamonds is an ultra high-end jeweler, with a particular focus on rare gems.
Hong Kong is becoming something of the exchange of choice for luxury retailers as Asian consumers become increasingly important. CLSA Asia-Pacific Markets estimates China alone will account for 44 percent of the global luxury market by the year 2020, becoming a $101.4 billion market. Analysts say listing in Asia, particularly Hong Kong, can be a savvy marketing move.
“The investment community in Asia would welcome more luxury goods, and in this case, superluxury goods like Graff. As more than 50 percent of global luxury sales are to Asians now and growing to two-thirds in the next few years, it makes sense to list here [in Hong Kong] so the company can be closer to their customers and help further boost brand awareness,” said Aaron Fischer, an analyst at CLSA.
Graff is following in the footsteps of some other luxury brands, such as Milan-based Prada SpA, which raised nearly $2.5 billion in its Hong Kong listing earlier this year, and U.S. luggage maker Samsonite, which raised $1.25 billion in a Hong Kong listing in June.
Others are expected. Coach Inc. is eyeing the Hong Kong market, where it is planning a secondary offering to give Chinese investors an opportunity to invest in the company. High-Italian motorbike maker Ducati is reportedly considering an IPO here, while Hong Kong’s largest jeweler, Chow Tai Fook, which is owned by tycoon Cheng Yu-tung, is reportedly preparing a $3 billion to $4 billion IPO in the city sometime next year.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)