Prada IPO a Go?

Posted by: Charles DuBow on February 08

A report from Reuters this morning says that Prada is likely to take itself public this year. This comes despite Tommy Hilfiger’s decision to temporarily shelve its IPO and growing concerns about growth during 2008. Industry watchers were wondering whether Prada, and its Italian super luxury confrere Salvatore Ferragamo, would also stay out of the public markets for the rest of the year.

“‘In my opinion, absolutely not,’ Gaetano Micciche, head of Intesa Sanpaolo’s (ISP) corporate and investment banking division, told reporters when asked about a possible delay in the planned IPO.”

The reality of the situation is that many analysts do not think that the current economic downturn will last that long. “Companies like Prada and Ferragamo have to think beyond 2008,” says Claudia D’Arpizio, a Milan-based consultant at Bain & Company specialising in luxury goods. “Their strategies are more than just financial and they are taking the steps necessary to prepare themselves for the next phase.”

Of course, it bears noting that Intesa Sanpaolo acquired a 5% in Prada through a capital increase of €100 million ($146.5 million) in 2006, a move that valued the entire company at €2 billion ($2.93 billion). They, like any investor, want a return on their money, preferably sooner than later. The hope is that they won’t rush an IPO if market conditions are adverse. Prada has successfully carved out a choice niche for itself in the high end fashion business predicated on its original designs and savvy marketing. It would be a shame if they had their hand forced before they were ready.