Milan–Salvatore Ferragam has filed for a stock market listing where it hopes to raise nearly 500 million euros (about $709 million), which could value the 84-year-old luxurygoods company at as much as 1.8 billion euros.
Ferragamo plans to list a 22.7% stake on the Milan Stock Exchange. Last Friday, after getting the necessary approvals from domestic regulators, Ferragamo announced details of its initial public offering at a price range at between 8 euros and 10.50 euos a share.
The Ferragamo IPO along with larger rival Prada’s IPO, which starts trading on June 24, are being closely watched by investors since they are among the few remaining independent luxury companies, both of which forecast huge growth in Asia, the driver of luxurygoods growth in the next decade.
“We Believe in Italy”
While Prada plans to list its share on the Hong Kong Sock Exchange, Ferragamo is set to float its share in Italy. Nothing that the move to list a minority stake was approved unanimously by family members a year ago, Ferruccio Ferragamo, chairman, said, “We believe in Italy.”
To entice investors, Ferragamo said the company plans to pay a dividend on its 2011 results “with a payout ratio in the range of 40 to 50%,” a move facilitated in part by its low debt. The company’s net debt has fallen on the last two years and stood at 47.5 million euros (about $68.5 million) at the end of March, according to Ernesto Greco, chief financial officer.
One of the reasons Prada seeks a listing in Hong Kong is due to the importance of Asia to luxurygoods. While Prada is said to have raised about $2.1 billion in its IPO, its shares have been selling on the low end of its price range due to the recent slump in global markets.
Ferragamo, however, is also planning rapid expansion in Asia. Michele Norsa, ceo, said Wednesday that Ferrgamo sells more in Hong Kong than in any other city in the world. Hence, Ferragamo plans 25 new stores worldwide—10 of them in China. And in March, the Ferragamo family sold an 8% stake to Hong Kong businessman Peter Woo and agreed to raise its stakes in distributors based in China, Hong Kong, Taiwan and Macau. Woo will become a board member upon the listing.