Graff Diamonds, specialized in selling luxury polished diamonds and high end exclusive, will be valued between $3 billion and $4 billion when it lists in Hong Kong, according to people familiar with the process, Financial Times reported.
The jeweller is looking to raise $1 billion by selling between 25 and 35 per cent of the group in a roadshow that kicks off on Monday. That would make it the second largest initial public offering this year in Hong Kong, following the $1.8 billion share sale by China’s Haitong Securities last month.
Bankers last week set a pricing range of 18-24 times Graff’s 2012 earnings. The London-based company will use the proceeds from IPO to fund a reorganisation, pay down $150 million worth of debt and to expand, particularly in Asia. The start of trading is slated on 7 June 2012.
According to Bloomberg, Laurence Graff will yield about $850 million following the IPO.
Graff Diamonds’ single most important customer has accounted for between 13 and 19 per cent of sales in each of the past three years. The top client last year bought a single item worth $100 million and accounted for $119 million of 2011 revenue of $756 million, according to data seen by the Financial Times.
The top five customers regularly account for about 30 per cent of sales and the top 20 for about 45 per cent of sales, according to people familiar with the business.
Graff procures rough diamonds from Gem Diamonds mining the stones in Lesotho and Australia, 14% share owned by Graff.
Graff follows a number of other luxury brands in choosing to list in Hong Kong, including Prada, Samsonite and L’Occitane.
While bankers expect Graff to attract very strong retail and institutional demand, the price-earnings multiple has been set lower than some had expected, with an analyst pre-sale report predicting a range of 24 to 31 this month.
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