Samsonite mandates five banks for Hong Kong IPO

Goldman Sachs, HSBC, Morgan Stanley, RBS and UBS bag the mandate to help Samsonite go public in Hong Kong.

Samsonite, the luggage manufacturer known for its hard suitcases, has mandated Goldman Sachs, HSBC, Morgan Stanley, Royal Bank of Scotland and UBS for its planned initial public offering in Hong Kong, sources said yesterday. The company hasn’t confirmed the targeted deal size, but the sources said the offering is expected to raise about $1 billion.

Given that the process is now underway, the IPO could possibly come towards the end of the second quarter, but a less aggressive estimate is that the company will wait until the second half. The arrangers were selected following a beauty parade last week that, according to a source, saw at least 10 banks pitch for the mandate.

US-headquartered Samsonite has had several different owners since it was founded in 1910. It is currently owned by Luxembourg-based private equity firm CVC Capital Partners, which bought the company in July 2007 for $1.7 billion. RBS provided financing for the acquisition and when Samsonite had financial difficulties in 2009 the UK bank ended up swapping some of its debt into a minority equity stake.

The company’s IPO plans are in line with the expectation that more international companies will seek a listing in Hong Kong to tap into the growing pool of investors that are based in this region, including China. For consumer product companies, such as Samsonite, it is also a case of converting their solid retail customer base in China and Hong Kong, which is already familiar with their products, into investors.

The first company to test these waters was French skincare brand L’Occitane International, which listed in Hong Kong in early May last year after raising $787 million from a highly popular IPO arranged by CLSA, HSBC and UBS.

That listing sparked a wave of interest among other branded consumer products companies and almost every bank says they are in dialogue with other companies that are at least interested in the idea. In January, Italian fashion house Prada confirmed that it is aiming to list in Hong Kong this year and said it had mandated Italian investment banks Intesa Sanpaolo and UniCredit together with CLSA and Goldman Sachs to help arranged a deal. Other potential listing candidates among this category of companies are Moncler, a French designer of high-end down jackets and sportswear that is 48% owned by Carlyle Group, and Yum Brands, the US fast food giant whose brands include KFC, Pizza Hut and Taco Bell.

A second category of international names eyeing Hong Kong as a listing destination are natural resources companies, which are pondering a listing closer to the world’s largest consumer of commodities, i.e. China. Many of these companies are already exporting their products to China, while others seem to be hoping that a listing in Hong Kong will raise their profile and help them gain a toehold in this huge market.

The very first non-Asian company to list in Hong Kong was Russian aluminium producer United Company Rusal, whose $2.24 billion IPO (while a bit rough at the edges) did prove that the Hong Kong market is deep enough to absorb non-Chinese companies. It was followed last year by a number of mining companies and last month and that trend too seems to be continuing. In January, Glencore International, the world’s largest commodities trader and the owner of a controlling stake in Swiss mining company Xstrata, said is seeking to list in Hong Kong and London, with the primary listing set to be in Hong Kong. The company, which has an estimated equity value of $50 billion to $60 billion, has mandated Citi, Credit Suisse and Morgan Stanley to help arrange the IPOs that are currently targeted for the second or third quarter.

Samsonite makes suitcases and other travel-related products under several different brands, including Samsonite, Samsonite Black Label and American Tourister.

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