Bloomberg News

Samsonite IPO Said to Raise $1.25 Billion at Low-End Price

June 10, 2011

(Updates with underwriters in seventh paragraph.)

June 10 (Bloomberg) -- Samsonite International SA sold shares at the bottom end of a revised price range in its Hong Kong initial public offering, raising HK$9.73 billion ($1.25 billion) for the company and shareholders, two people with knowledge of the IPO said.

Samsonite, the luggage maker backed by London-based CVC Capital Partners Ltd., sold shares at HK$14.50 apiece, the people said, declining to be identified because details are private. The company yesterday narrowed an original price range marketed to investors to HK$14.50 to HK$15.50, from HK$13.50 to HK$17.50.

The IPO raised $250 million less than the maximum originally sought, highlighting how companies are struggling to obtain top valuations in Hong Kong as the Hang Seng Index suffers its worst monthly slump in a year. Two-thirds of companies that went public in the Chinese city in 2011 have fallen from their offer price, data compiled by Bloomberg show.

“Weak market sentiment is working against high valuations for IPOs,” said Nelson Yan, who helps oversee $90 million as investment manager at Mayfair Pacific Financial Group in Hong Kong. “When markets fall, companies that set price ranges aggressively have to settle for relatively low final pricing.”

Huaneng Renewables Corp., the wind-power unit of China’s biggest electricity producer, dropped as much as 11 percent today, its first day of trading in Hong Kong. The company had sold shares near the mid-point of a marketed price range.

Prada Valuation

Mansfield, Massachusetts-based Samsonite’s IPO values it at 18.3 times estimated earnings for this year, one of the people said. The top end of the original price range would have valued the company at 22 times forecast profit. Companies on the Hang Seng Consumer Goods Index trade at an average 15.3 times estimated full-year earnings, data compiled by Bloomberg show.

An outside spokeswoman for Samsonite, who declined to be identified citing company policy, had no comment. Goldman Sachs Group Inc., HSBC Holdings Plc, Morgan Stanley and Royal Bank of Scotland Group Plc are managing the offering. RBS owns 30 percent of the company.

Prada SpA, the Italian maker of Miu Miu handbags, is scheduled to set a final price next week for an IPO in Hong Kong that may raise as much as $2.6 billion, according to people with knowledge of the deal. Prada’s sale may give it a maximum valuation of 28 times full-year earnings, a person with knowledge of the matter said.

Market Swings

Hong Kong’s Hang Seng Index has retreated 2.2 percent since June 3, heading for its fourth straight weekly decline. The last time the benchmark gauge for equities in Hong Kong dropped for four straight weeks was in the period ended May 7, 2010, data compiled by Bloomberg show.

Stock-market swings have made it more difficult for companies to extract top valuations. Casino venture MGM China Holdings Ltd. is the only company to price a $1 billion-plus IPO in Hong Kong at the top end of its marketed range since October, data compiled by Bloomberg show.

Samsonite was bought by CVC, a private-equity firm, for about $1.7 billion in October 2007. Its U.S. retail division, Samsonite Co. Stores, in 2009 sought bankruptcy protection from creditors after the financial crisis caused a slump in demand for travel-related products.

The company started as Shwayder Trunk Manufacturing in Denver in 1910, with Samson as its first brand. The first Samsonite-brand suitcase was introduced 29 years later, according to Hoover’s, Inc.

--Editors: Philip Lagerkranser, Frank Longid

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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