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- 15 Nov 2011
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The Latest Investments, LVMH, De Beers & Coach

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The Latest Investments as LVMH buy yet another one of their suppliers, Prada follows suit in Hong Kong and Coach buys back it’s Taiwanese distribution

The popularity of Initial Public Offerings seems to have come full circle in 2011. The BBC described the IPO environment this summer as “faltering", back in June we reported the cancellation of more than twenty European IPO’s this year, despite the launch of both Prada and Salvatore Ferragamo on the Hong Kong and Milan stock exchanges respectively. Arguably both, to a level of great success – Prada remains the single biggest listing on the HK exchange this year.

Chow Tai Fook, who reportedly received approval to list last week and Britain’s Graff Diamonds, are set to lead the next generation of IPO’s. Jing Daily have named Britain’s Aston Martin and Burberry, Coach from the US, and Italy’s Ducati as other companies rumoured to be mulling Hong Kong listings but simultaneously mused that most brands were taking a wait-and-see approach.

For the moment, we too will have to wait and see whether Asia’s influence on luxury continues to influence its financial decisions. In the mean time, we present a round-up of the need to know investment activity in the luxury sector.


Acquired: ArteCad, LVMH

LVMH has announced that the company has acquired 100 percent shares of leading Swiss watch dial-maker, and former supplier, ArteCad. “This transaction will enable LVMH to further reinforce its industrial integration in watch-making and guarantee its independence in the strategic area of watch dials. LVMH already produces mechanical movements as well as cases, dials and bracelets,” revealed an LVMH statement following the acquisition. ArteCad SA manufactures more than 350,000 watch dials a year and supplies numerous Swiss timepiece manufacturers.

Source: International Business Times


Negotiating: Saab, Pang Da Automobile Trade Co and Zhejiang Youngman Lotus Automobile Co

Saab – currently under court protection from creditors to stop bankruptcy filings – has been negotiating a €100 million rescue purchase by Pang Da Automobile Trade Co and Zhejiang Youngman Lotus Automobile Co, pending approval from General Motors and the Chinese authorities. The proposed deal would bring a 70 million euro loss to current owner Swedish Automobile, giving Youngman and Pang Da 60 percent and 40 percent stakes respectively.

However, General Motors has announced plans to block the sale, citing concerns about intellectual property currently licensed to Saab falling into the hands of its Chinese competitors. Saab not must come to an agreement with the potential investors that will be agreeable to GM. Failing a suitable agreement, followed by liquidation, is the likely outcome for the Swedish automaker.

Source: Reuters
Source: Motor Authority


Listing: Chow Tai Fook, Hong Kong

Chow Tai Fook has reportedly received approval to list on the Hong Kong Stock exchange. The gold and diamond jeweller and a homegrown luxury brand is controlled by Cheng Yu-Tung, better known as the chairman of one of Hong Kong’s leading property developers, New World Development. IFR estimates a valuation of approximately 25 times earnings and a sale of as little as 10% of its enlarged capital. Typically, companies listing in Hong Kong must have a minimum free float of 25%, although the rules allow this to be reduced to 15% if the expected market capitalisation is over $1.3 billion.

Source: Market Watch


Bankrupt: Lejaby

Lingerie firm Lejaby has filed for the French equivalent of Chapter 11 bankruptcy protection with the commercial court in Lyon, France. An employee for the company told WWD that the firm has been given six months to find a sustainable solution to its cash-flow problems, whilst continuing to produce and deliver its own collections, as well as licensed lingerie for Nina Ricci and Christian Lacroix.

Source: WWD


Bail Out: Ferretti SpA, Royal Bank of Scotland

In its second rescue attempt in two years, yachtmaker Ferretti SpA are reportedly in talks with Royal Bank of Scotland Group Plc (RBS) and distressed-debt hedge fund Strategic Value Partners to inject cash into the flailing business. Whilst sources remain unconfirmed, an investment between €150 million and €180 million is rumoured to be on the table, in a bid to cut its debt further after lenders agreed to reduce the liabilities to about 600 million euros from more than 1 billion euros in 2009 in exchange for a 53 percent stake.

Source: Reuters


Buy Back: Coach, Taiwan Distribution

Following the buyback of distributors in Japan (2001) and China (2008), Coach has reached an agreement to take back its domestic retail business in Taiwan, which will transition the business over to Coach in early January. “Taking over these markets allows us to continue to solidify our market share and really achieve the full destiny of the Coach brand,” said Ian Bickley, president of Coach International. “Asia is going to be an important market for us to have a very, very strong position in.”

Source: WWD


Acquired: De Beers Group, Anglo American

Mining company Anglo American has taken full control of the De Beers Group for a reported $5.1 billion, used to buy the Oppenheimer family out. Anglo, led by its chief executive, take its 45 percent holding in De Beers to 75 to 85 percent, depending on whether the diamond mining company’s third shareholder, the government of Botswana, exercises its right to buy a quarter of the Oppenheimer stake. Factoring in about $1.1 billion of debt, the deal gives De Beers an enterprise value of at least $13.8 billion.

Source: The New York Times


Acquired: BuyWityMe.com, Gilt City

Gilt City has acquired daily deal site BuyWithMe.com for an undisclosed amount. The acquisition is thought to assist Gilt City expand in the ten markets it’s already in, as well as in new ones over the next 12 months. Kevin Ryan, chief executive officer and founder of Gilt Groupe, said, “BuyWithMe complements our philosophy of providing premium offers to customers at great prices. We are excited to capitalize on this incredible opportunity to grow our lifestyle positioning.”

Source: WWD


Invested: Prada, Sitoy Group

Prada are set to invest in Hong Kong-based Sitoy, manufacturers of handbags and leather goods for Prada and other global brands. The Italian fashion house are rumoured to be purchasing nearly one-fifth of the up to $130 million initial public offering, agreeing to buy 19.6 percent of Sitoy shares on offer, with venture capital firm IDG buying 22 percent, reported IFR.

Source: Fashion Mag


Capital: Beyond the Rack, Panorama Capital

The leading online flash sale retailer in Canada, Beyond the Rak, has raised $36 million in third round funding, led by Silicon Valley-based Panorama Capital. The e-commerce site so far has raised $53 million. The investment will address improvements in automation and technology, acceleration of marketing and acquisitions. The firm currently ships 8,000 packages a day now and hopes to ramp up to 16,000 packages a day next year.

Source: WWD





For more in the series of The Latest Investments, please see our most recent editions as follows:

- The Latest Investments: Hermès, Corum & Aman Resorts
- The Latest Investments, Brioni, Château Lascombes & Proenza Schouler
- The Latest Investments, Prada, L Capital & Qatar Luxury Group


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