Samsonite prices HK IPO at bottom, raises $1.25 bn: Sources

Samsonite International SA, the world's biggest luggage maker, raised USD 1.25 billion after pricing its Hong Kong initial public offering at the bottom of a revised price range as weak global markets sapped investor demand.

Companies including lender Ally Financial, Australian mining startup Resourcehouse Ltd and auto parts company Nanning Baling Technology Co have shelved plans for IPOs in recent days because of weak appetite from fund managers and retail investors around the world.

Wind power generator Huaneng Renewables Corp, which followed through with its listing, plunged as much as 11.2% in its Hong Kong trading debut on Friday, casting a shadow over upcoming IPOs such as the Prada SpA's planned USD 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 price 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 said.

Global stock markets have been under pressure in recent weeks with the MSCI All-Country World Index down more than 6% since the start of May.

RANGE TIGHTENED

Luxembourg-based Samsonite, backed by private equity firm CVC Capital Partners Ltd, priced its IPO at HKD 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 HKD 13.50 to HKD 17.50 per share, but narrowed it to HKD 14.50 - HKD 15.50 on Thursday.

CVC stood to earn about USD 521 million from the sale of Samsonite shares, with RBS fetching nearly USD 300 million for its portion of the sale. Samsonite's Chief Executive Tim Parker raised about USD 50.3 million from the sale of part of his shares.

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, sold 671.2 million shares to raise HKD 9.73 billion (USD 1.25 billion).

Samsonite sold 121.1 million new shares and plans to use all proceeds from the primary offering to pay down debt, according to the IPO prospectus. CVC, RBS and several former and current employees of the company sold another 550.1 million shares in a secondary offering.

Goldman Sachs Group Inc, HSBC Holdings Plc and Morgan Stanley managed the offering, with UBS AG and RBS acting as joint bookrunners.

Underwriters stand to earn as much as USD 40.6 million in fees from the deal, equivalent to 3.25% of the IPO.

(USD 1 = 7.784 Hong Kong Dollars)