L’Occitane made its Hong Kong stock exchange debut yesterday on a day of market turmoil and in a move closely watched by foreign luxury goods companies keen to tap the lucrative Asian market.
The cosmetics group, the first French company to list in the city, plans to use the US$704 million it raised in the initial public offering for an aggressive expansion in China, Japan and other emerging markets.
However, the listing was launched on a day Asian markets fell, after US shares saw a record intraday drop on deepening fears that Greece’s debt crisis could spread through Europe.
PHOTO: REUTERS
L’Occitane shares fell 4.5 percent to close at HK$14.40, after declining as much as 8.5 percent during the day’s trading.
Company president Reinold Geiger said he was not worried about the market tumble as his focus was on the long-term growth of his business.
“There are ups and downs in the stock market. The development of a company like ours is long-term. For the long term, we are very positive,” he said after the launching ceremony at the stock exchange. “We have the biggest customer base in Asia. It is more than all of Europe and United States combined. There is no point for us go anywhere else.”
Swire Properties (太古地產) pulled its plan for a US$3.09 billion share sale on the Hong Kong exchange on Thursday, only two days after Giti Tire (佳通輪胎), China’s largest tire maker, postponed its US$500 million IPO in the city.
Iron ore producer China Tian Yuan Mining (天源礦業) yesterday decided to halt its US$522 million issue, a person familiar with the situation told Dow Jones Newswires.
However, Ronald Arculli, chairman of the city’s bourse operator, said the Hong Kong market would be more stable than its European counterparts because of its proximity to China.
“L’Occitane sees that their growth in the years to come is very much China and Asia-based. The listing is a win-win situation for L’Occitane and indeed for the Hong Kong stock exchange,” he said.
Market analysts said the move would be closely watched by other overseas luxury products groups that are considering IPOs in Asia. They added that Asian women in recent years have pursued not only French brands but beauty products made of natural and organic ingredients.
“Everyone in the press in Europe was excited about our IPO,” L’Occitane’s Asia-Pacific president Andre Hoffmann said.
Hoffmann said the company planned to double the number of its stores in China — its second-largest Asian market after Japan last year — from the current 50 in the next five years.
The firm also planned to launch e-commerce services in China toward the end of this year, he said.
“We only need 1 percent of all the people in China to be interested in organic skincare products and it will mean big business for us,” Hoffmann said.
Geiger said L’Occitane was seeking merger and acquisition opportunities in the US, Asia and Brazil. L’Occitane this week priced its shares at the top of its indicative price range of HK$12.88 to HK$15.08 each after its shares in the public tranche were 158 times oversubscribed.
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