London´s market faces draught of luxury sector IPOs

Once thought as THE place to be when launching a luxury goods company´s IPO, London Stock Exchange is facing a drought that starts to last for too long. Shareholders prefer more exotic markets such as Hong Kong or New York.

Richard Weaver, capital markets partner at PwC said when presenting the IPO Watch Europe earlier this year: “Companies considering an IPO in 2012 should prepare and position themselves to be ‘ready to go’ when the windows open. Exactly when markets will pick up again is uncertain. The Olympics may be well under way by the time the markets get out of the starting blocks. In order to access the key IPO windows in 2012, companies will have to ensure that the groundwork is completed well in advance.”

When the London-based private equity group Doughty Hanson and other shareholders revealed they were set to sell shares in Tumi, the premium travel bag company, it was not a big surprise for the market that the $300m share offering headed for New York, reported ‘City AM’. Commenting on this matter, a source close to the Tumi flotation said to the British journal: “The UK is a good place to float for resources and mining groups but no longer for luxury. New York or Hong is preferable. You’re selling to a larger consumer audience and a market where there’s
greater investor expertise.”

Other luxury sector IPOs, including Samsonite and Graff Diamonds, went or have chosen to go the far east, where savvy investors have a great hunger - and even greater understanding, for the luxury market.

Other European market seeing IPO activity within the industry lately is Milan, host to the  float of Brunello Cucinelli. The cashmere champion is not the only successfully floated Italian apparel company, with Salvatore Ferragamo listed in Milan last summer and its shares seeing a rise of nearly 60 per cent since then. Also almost a year ago, Prada debuted in Hong Kong stock exchange.