Prada SpA, the Italian owner of the eponymous fashion label, is studying an initial public offering in Hong Kong for the first half of 2011, according to three people familiar with the situation.
Prada, which has scrapped an IPO four times in the past 10 years, might raise more money having a primary listing in Hong Kong than in Milan as individual investors are more active in Asia, said the people, who declined to be identified because the talks are private. Prada may hire banks as soon as next month, one of the people said.
The Milan-based company’s sales may reach 2 billion euros ($2.75 billion) in 2010, while earnings before interest, taxes, depreciation and amortization may be between 450 million euros and 500 million euros, the people said. Prada will probably make a final decision on whether to proceed with an IPO before the end of this year, they said.
“It’s starting to look like the right moment to do it,” said Armando Branchini, vice-president of Milan-based consulting firm InterCorporate. “The conditions are there for an IPO now, both externally and at Prada.”
Prada, which also owns the Miu Miu, Car Shoe and Church’s brands, has cut debt and opened new stores in Asia as the luxury-goods industry rebounds from its worst year on record. French perfume-maker L’Occitane International SA sold stock in Hong Kong in May to take advantage of demand for IPOs in Asia.
Hong Kong is among the markets Prada is looking at for a possible listing, a company spokesman said. No decision has been taken and Prada continues to monitor market conditions, he added, declining to comment further.
Prada may fetch a valuation in excess of Louis Vuitton Moet Hennessy SA’s trading multiples, said two of the people. The world’s largest maker of luxury goods has an enterprise value of 11.65 times 2010 earnings before interest, taxes, depreciation and amortization. Prada is monitoring orders for its spring-summer 2011 collection before making a decision on whether to move forward with the transaction, one of the people said.
Prada’s Ebitda more than doubled to 225.2 million euros in the six months ended July 31, the company said Sept. 17. Revenue climbed 29 percent to 936.5 million euros, led by a 47 percent gain in Asia. Prada’s debt was 485 million euros at the end of 2009, the company said in March. Prada said in September that it had improved its net financial position. Parent company Prada Holding BV also has debt, which hasn’t been disclosed.
Prada, controlled by Chief Executive Officer Patrizio Bertelli, his wife Miuccia Prada and her family, abandoned plans to list in 2008 because of adverse market conditions. The company had hired Intesa Sanpaolo SpA, UniCredit SpA and Goldman Sachs Group Inc. to manage the offering at the time. Intesa and UniCredit are guaranteed a role in any offering as part of a loan agreement with Prada, while Goldman’s mandate has expired, the people said.
Prada, founded by head designer Miuccia Prada’s grandfather Mario Prada in 1913, still operates its first outlet in Milan’s 19th-century Galleria shopping arcade.