Graff Diamonds hires four banks for Hong Kong IPO

The London-based diamond retailer mandates Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley to help with a planned listing in Hong Kong next year, sources say.

Graff Diamonds, the London-based diamond retailer that was founded by its chairman Laurence Graff in the 1960s, has mandated Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley as global coordinators for its upcoming initial public offering in Hong Kong, sources say.

Separate sources has confirmed that HSBC has also been hired as a joint bookrunner. Rothschild is a financial adviser to Graff with regard to the IPO plans.

The company is reportedly seeking about $1 billion from the listing, which is expected in the first half of next year.

This comes after Chow Tai Fook Jewellery last week raised $2 billion from a Hong Kong IPO that attracted about 180 institutional investors despite volatile markets and keen competition for capital with two other large IPOs in the market at the same time. The company, which is the largest jewellery retailer in Hong Kong and China, will start trading tomorrow.

Graff’s bid to list in Hong Kong is also part of a recent trend that has seen several international brand names go public here as they try to get closer to their rapidly growing consumer base in Asia. There is also a belief that investors in Asia, or those who focus primarily on Asian listings, have a better understanding for the China growth story and are willing to pay for it. In June, Italian fashion designer Prada raised $2.5 billion from Hong Kong’s largest IPO this year and was able to achieve a 15% premium versus its US- and European-listed peers. The company was the first luxury goods retailer to list in Hong Kong and said it chose to come here because Asia is expected to account for the bulk of its future growth.

Graff too is looking to increase its presence in the region and plans to open two new flagship stores in Macau and Hangzhou in China during 2012. It already has stores in Tokyo, Hong Kong, Shanghai, Beijing and Taipei.

In a report issued in April this year, BOC International noted that average spending on jewellery in China is still low and projected that it will increase at a compound annual growth rate of 25% between 2010 and 2013. Based on 2009 data, China had a per-capita consumption of jewellery of just $19, which compares with $260 in the US and $214 in the EU. Hong Kong had a per-capita jewellery consumption of $97 in the same year.

Graff currently has 30 stores around the world and, according to its website, aims to open four more next year. Aside from Macau and China, the other two will be in Dubai and in Gstaad in Switzerland, which is the current home of the company chairman.

The company is involved in all stages of the diamond trade from the sourcing of the rough to the cutting and polishing of the diamond and the design of the final piece. It also owns a 15% stake in Gem Diamonds, a publicly listed mining company with operations worldwide.

¬ Haymarket Media Limited. All rights reserved.
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