CHINA: London luxury jeweller Graff Diamonds decides to pull its planned $1 billion initial public offer on the Hong Kong stock exchange due to adverse market conditions.

Record ID: 238727

  • Title: CHINA: London luxury jeweller Graff Diamonds decides to pull its planned $1 billion initial public offer on the Hong Kong stock exchange due to adverse market conditions.
  • Date: 1st June 2012
  • Summary: HONG KONG, CHINA (MAY 31, 2012) (REUTERS) HONG KONG STOCK EXCHANGE STOCK CODES AND NAMES HANG SENG INDEX AT 18424.55 (-265.67) POINTS AT AROUND 1020 LOCAL TIME (0220 GMT) VARIOUS OF STOCK BROKERS WORKING HONG KONG STOCK EXCHANGE HANG SENG INDEX AT 18437.93 (-252.29) POINTS AT AROUND 1025 LOCAL TIME (0225 GMT) (SOUNDBITE) (English) GEOFF LEWIS, HEAD OF INVESTMENT S
  • Embargoed: 16th June 2012 13:00
  • Keywords:
  • Location: China
  • Country: China
  • Topics: Business,Economy
  • Reuters ID: LVADISI2FNOX6EGSM08REUZSUCNX
  • Story Text: London luxury jeweller Graff Diamonds has pulled its planned $1 billion Hong Kong initial public offering, the fourth major IPO to be called off in Asia this week, as tumbling stock markets threaten to claim yet more casualties in the region.
    Graff had been due to price its IPO on Friday (June 1), putting it on the verge of becoming Asia's biggest completed flotation so far this year, but investors baulked at the issue amid market-wide fears over the euro zone crisis and China's economic slowdown.
    "Consistently declining stock markets proved to be a significant barrier to executing the transaction at this time," Graff said in a statement. Graff was due to list next week.
    A slump in Asian equities in the past week has already derailed three major IPOs which were aiming to raise a collective amount of up to $1.37 billion: two in Hong Kong and one in Singapore.
    Deal volumes in Hong Kong, Asia's IPO capital, have dived more than 80 percent in 2012 through mid-May, compared with the same 2011 period. In the wider Asia-Pacific, overall volumes for share issues, including secondary offers, are down by a fifth.
    Graff, which had planned to raise capital to help build a bigger Asian business centering on China, pulled its IPO as European and U.S. markets tumbled more than 1 percent on Wednesday (May 30) on fears over the euro zone.
    Hong Kong's benchmark Hang Seng index has plunged 9 percent since May 7, when Graff executives, its bankers and advisers began meeting institutional investors and fund managers to gauge demand for the offering.
    Stocks in the luxury goods sector have been hit particularly hard. On Wednesday alone, the Hang Seng closed 1.9 percent lower, making listed firms a cheaper option for investors than those looking to go public, analysts and investors say.
    On Thursday (May 31), shares opened weaker with the Hang Seng Index showing its worst May performance since 1998. It opened down 1.17 percent at 18,470.77.
    But Hong Kong-based economist Geoff Lewis said the cancellations were only temporary interruptions.
    "Well I think we are definitely going through a rough patch that is still more to global worries, global fears, risk-off trade again, and concerns coming from Europe. I think the Asian IPO market was healthy enough earlier in the year, so I wouldn't be surprised if we see a few months now where it is rather difficult for firms to come to the market with IPOs. But I would imagine better conditions will return later in the year. I don't think this is a major turning point. I see it more as a temporary interruption which has more to do with the events outside Asia than within Asia," said Lewis, who is also head of investment services of JP Morgan Asset Management.
    Graff Diamonds was founded in 1960 by Briton Laurence Graff. Born to Jewish immigrant parents in London, he has always kept control of the firm, attracting wealthy and celebrity clients such as the sultan of Brunei, Oprah Winfrey and Imelda Marcos.
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