HONG KONG — Trinity Group, a subsidiary of privately held Li & Fung (1937) Ltd., expects to raise between 485 million Hong Kong dollars to 664 million Hong Kong dollars by listing on the stock exchange here, although the plan could raise up to 889 million Hong Kong dollars.
In U.S. dollar terms, the initial public offering could raise anywhere from $62.6 million up to $114.7 million.
The firm, which was acquired three years ago by Li & Fung, will offer about 452 million shares, to be priced at 1.30 Hong Kong dollars, or 17 cents, to 1.71 Hong Kong dollars, or 22 cents, a share.
Trinity manages six high-end and luxury men’s wear brands in the Greater China region, namely Kent & Curwen, Gieves & Hawkes, Cerruti 1881, D’urban, Intermezzo and Altea.
Announcing the IPO, Trinity management said the funds raised from the offering would be used primarily for acquisitions, to partially repay existing loans and to expand its retail network in China. “This is fairly and squarely a China consumer play,” said Jeremy Hobbins, Trinity’s deputy chairman. “This is where the major affluence is growing and these brands cannot be taken away.”
Trinity owns Kent & Curwen outright and has long-term perpetual licenses to manage the other brands throughout Greater China. The company also has a joint venture with Salvatore Ferragamo to operate in South Korea and numerous Southeast Asian countries.
In total, Trinity operates 390 stores across Asia, including 271 stores in 37 Chinese cities — making it the largest retail store network of high-end and luxury men’s wear brands in China, where men’s wear is the fastest-growing segment of the apparel market. “We are already strong in second- and third-tier cities in China,” said Sunny Wong, group managing director. “You cannot miss us in the provincial capitals. Now these cities have higher growth and a lot of the department stores are upgrading — they especially want men’s wear,” he said, adding Trinity intends to open 20 more stores by the end of this year and another 50 next year.
Trinity’s fully integrated business model means the company controls everything from design to fabric sourcing to manufacturing to pricing and retail for all of its brands, each of which is managed separately. It also is implementing a new inventory management system to help reduce the average number of inventory days — 483 for the first half of this year. “This is not high by industry standards,” said Bruno Li, Trinity’s chief financial officer, who noted, “Men’s wear is less cyclical and less volatile — the risk of obsolescence is quite low. And we’re expanding our outlets to clear inventory.”
Li also said sales are rapidly improving despite the impact of the current financial crisis. “The global financial crisis affected all businesses and we’re no exception. But we’re seeing the end of it,” said Li. He pointed out that in the third quarter of 2009, groupwide same-stores sales have increased by 13.9 percent. In China, same-store sales are up 14.7 percent.
The public offer opened on Wednesday and will close today. Trading on the HKSE is expected to begin Nov. 3 under stock code 891.
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