According to press releases this morning, these two major American brands are planning to offer shares on the Hong Kong Stock Exchange.
1) Prada: The Milan-based Italian fashion label is making preparations to debut on the HKEX in coming months. Word on the street is that Prada has set it sights on Chinese markets, expecting major growth in demand for luxury goods, and will offer over 423 million shares (16.5% of its enlarged capital) in its Hong Kong IPO. The company hopes to use cash from the IPO to pay for new stores and renovations to existing locations in both Chinese and domestic markets. Early analyst estimates are valuing the expected IPO at approximately $2 billion. This early peg could be up being revised upward if the underwriting banks find more demand and the company expands its offering to include another 65 million shares.
2 Coca-Cola (NYSE:KO): The much beloved beverage producer and world leader in the soft-drink market is seriously considering expanding its brand further into China by making a public offering on the HKEX. According to Coke’s Hong Kong Rep. Geoff Walsh, “We are interested in exploring the opportunity of listing our stock on the Shanghai Stock Exchange…We continue to have positive discussions with Chinese government officials as we look at this opportunity.”
Despite already having the best-selling soft drink in China (Sprite), Coca Cola’s fund-raising efforts will likely directed towards expanding production in China and proximate Asian markets. According to one analyst an IPO on the HKEX will facilitate this process as it provides “international activities to fund their [Coca Cola’s] Chinese expansion and allows them to raise funds in yuan.” The American based company accumulated an estimate 14% of its $35 billion in sales revenues from business in China last year, and expects this number to grow substantially. The news comes as competitor Pepsi (NYSE:PEP) has also made major expansive efforts in Chinese markets.
Be sure to check out “Why the HKEX is the New NYSE” for more about the rage over China’s ascending investment markets.