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LONDON - From ketchup to hot drinks, family-run investment firms are shaking up the consumer deals market, squeezing out private equity players and forcing them to change strategy.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.
Samsonite HK IPO bags $1.25 billion after pricing at bottom
HONG KONG |
HONG KONG (Reuters) - Samsonite International SA (1910.HK), the world's biggest luggage maker, raised $1.25 billion after pricing its Hong Kong IPO at the bottom of a revised price range as weak global markets sapped investor demand.
Companies including U.S. lender Ally Financial, Australian mining startup Resourcehouse Ltd and Chinese auto parts firm Nanning Baling Technology Co have shelved plans for initial public offerings in recent days because of weak appetite from fund managers and retail investors around the world.
Wind power generator Huaneng Renewables Corp (0958.HK), which followed through with its listing, plunged as much as 11.2 percent in its Hong Kong trading debut on Friday, casting a shadow over upcoming IPOs such as Prada SpA's planned $2.6 billion deal, which is set to price next week.
"Market sentiment has turned recently and some of the recent IPOs haven't performed well. As a result companies are forced to lower prices to factor in the weak demand," said Steven Leung, sales director with UOB Kay Hian Holdings.
"Generally, people are concerned when the selling shareholder is a private equity or a venture capital fund," he added.
Global stock markets have been under pressure in recent weeks, with the MSCI All-Country World Index .MIWD0000PUS down more than 6 percent since the start of May.
Luxembourg-based Samsonite, backed by private equity firm CVC Capital Partners Ltd CVC.UL, priced its IPO at HK$14.50 per share, said two sources with direct knowledge of the deal, declining to be named because details were not yet public.
Samsonite had initially set an indicative range of HK$13.50 to HK$17.50 per share, but on Thursday narrowed it to $14.50-$15.50, cutting the IPO size. The stock will start trading on June 16.
CVC stood to earn about $521 million from the sale of Samsonite shares, with RBS fetching nearly $300 million for its portion of the sale. Samsonite's Chief Executive Tim Parker raised about $50 million from the sale of part of his stake.
Parker, dubbed the "Prince of Darkness" by British union groups for his ruthless cost cutting, took the helm of Samsonite in 2009, firing nearly 1,000 people at Samsonite's offices and factories.
He also shut nearly half of the company's U.S. retail stores and one-third of the stores in Europe and discontinued some lines of business, helping the company cut an estimated $100 million in annual costs, according to the IPO prospectus.
CVC bought Samsonite in 2007 for $1.7 billion, including the assumption of debt, most of it funded from a loan with RBS. After a subsequent restructuring of the debt, as Samsonite struggled due to the impact on the travel industry from the global financial crisis, RBS ended up with nearly 30 percent of the luggage maker.
The IPO valued Samsonite at 18.3 times projected earnings in 2011, according to the consensus estimates of banks underwriting the deal. That would be below the average P/E ratio of 20.1 times for Asia ex-Japan consumer companies, according to CLSA estimates.
Samsonite sought a valuation of 22 times P/E at the top end of its original price guidance.
The company and shareholders, including CVC and Royal Bank of Scotland Group Plc (RBS.L), sold 671.2 million shares to raise HK$9.73 billion ($1.25 billion).
Samsonite, which sold 121.1 million new shares, plans to use all the proceeds to pay down debt, according to its prospectus. CVC, RBS and several former and current employees of the company sold another 550.1 million shares in a secondary offering.
Samsonite was founded with $3,500 in 1910 in the United States by luggage salesman Jesse Shwayder. A religious man, Shwayder named his top products after Samson, the biblical figure with super strength.
The company is looking to grab a larger piece of the $24.7 billion global luggage market, as well as boost its presence in casual bags and accessories. Luggage sales are forecast to grow to $31.6 billion in 2015, Samsonite said in its IPO prospectus, citing a Frost & Sullivan report.
Goldman Sachs Group Inc (GS.N), HSBC Holdings Plc (0005.HK) (HSBA.L) and Morgan Stanley (MS.N) managed the offering, with UBS AG (UBSN.VX) and RBS acting as joint bookrunners. Underwriters stand to earn as much as $40.6 million in fees from the deal, equivalent to 3.25 percent of the IPO.
(Additional reporting by Denny Thomas; Editing by Chris Lewis and Lincoln Feast)
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