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Saturday, 20 September 2014

EQUITIES: Graff pitches IPO shares at competitive valuation

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  • Luxury clocks and watches are displayed inside a Graff Diamonds store in Hong Kon

Graff Diamonds, the London-based high-end jeweller known for selling jewels to the super-rich, is looking to sell shares to investors at a valuation of 18–24 times 2012 earnings, in line with other luxury brands such as Burberry, Prada and Ferragamo.

Source: Reuters/Bobby Yip

Luxury clocks and watches are displayed inside a Graff Diamonds store at Peninsula Hotel in Hong Kong November 22, 2011

The price range per share will be disclosed before books open on Monday. Bankers involved, however, told IFR that the valuation had already been determined.

Depending on the number of shares made available, Graff’s public offering is expected to raise around US$1bn.

The jeweller has set an initial indicative price range of HK$25–HK$37per share, according to a Reuters report. The company is currently looking to sell between 211m and 312m shares, the report added.

A source said earlier the company was looking to raise about US$850m from selling new shares and the company’s existing shareholders were also looking to sell some secondary shares.

The valuation is lower than where the company has sounded investors during the premarketing stage. A Barclays pre-deal report valued the company at a 2012 P/E of 23–28. Hong Kong’s main share index has fallen 8.5% since Graff started premarketing on May 7.

Pricing is slated for May 31.

Of the IPO proceeds, Graff plans to use about 28% to purchase the inventory of DiamondWorks and 25% to buy the entire outstanding share capital of Graff Monaco. The rest will be used mainly for the repayment of debt.

Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley are joint global co-ordinators on the deal. The four banks are also joint bookrunners with HSBC. The co-leads are Barclays and ICBC International.

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