HONG KONG (AP) — Shares of Italian fashion house Prada SpA were nearly flat in their Hong Kong stock market debut Friday, amid lukewarm investor interest in the city's most glamorous IPO of the year.
Prada shares gained as much as 50 cents, or 1.2 percent, to HK$40 in the first hour of trading but closed at $39.60, just 10 cents higher than the offering price.
The stock was widely expected to tank on its debut because of slumping global markets and worries from Hong Kong investors that they would have to pay Italian taxes. But while it didn't drop, it also failed to track gains in the broader Hong Kong market as the Hang Seng Index rebounded nearly 2 percent. The index is down 5.8 percent over the past three months.
Milan-based Prada sold 423.3 million shares, or a 16.5 percent stake, to raise HK$16.7 billion ($2.1 billion), in its initial public offering. The stock was priced at the low end of the offer range.
Despite the lackluster performance, Chief Executive Officer Patrizio Bertelli was upbeat at a listing ceremony.
"The very early trades seem to confirm the pricing was right. Signs are very good," he said.
Prada, which also owns the Miu-Miu, Church's and Car Shoes brands, sold 95 percent of shares to big global investors. Hong Kong individual investors got the remaining 5 percent of shares, about half the usual proportion.
Local investors were likely turned off by warnings in Prada's prospectus that shareholders could be hit with Italian capital gains tax of 12.5 percent on any profits from selling their shares as well as up to 27 percent withholding tax on dividends. Hong Kong doesn't tax capital gains or dividends and it doesn't have a dual-taxation agreement with Italy.
Investors were also cool to Prada because "there are too many IPOs happening at the same time and also the share price is generally perceived to be quite high," said Andrew Leung, an independent analyst.
A number of other companies have been planning Hong Kong listings, although several have shelved or postponed them recently amid the market's tumble.
Prada is the first Italian company to go public in Hong Kong. It follows a number of other foreign companies listing recently in Hong Kong in hopes of cashing in on China's booming economy. It's also aiming to raise awareness of its brand among China's growing number of wealthy consumers.
"We are positive that the greater China region is going to be the market of the future," Bertelli said.
Miuccia Prada, Bertelli's wife and the company's president and chief designer, was not able to make it to the listing ceremony because she was in Shanghai for a fashion show, he said.
The company was founded in 1913 by Prada's grandfather, Mario Prada, who started out selling leather bags, trunks and crystal. Today it's known for stylish leather handbags and classic dress designs that have helped it become a symbol of high fashion.
The Prada family, which owned 95 percent of the company prior to the initial public offering, will profit handsomely from the listing. About 62 percent of the shares in the IPO came from existing stock they owned, reaping them about $1.3 billion before fees. Another 24 percent came from Italian bank Intesa Sanpaolo's stake, which owned 5 percent.
The remaining 14 percent comes from new shares that will raise about $270 million after fees for the company. Most of the money will be used to open more stores or expand existing ones and pay off debt.
Prada had discussed going public several times in the past, with the most recent attempt delayed after the world financial crisis in 2008 sent markets tumbling.
Swiss commodities trader Glencore International and luggage maker Samsonite International S.A. have also listed in Hong Kong this year, while luxury handbag maker Coach, which is already listed in New York, has selected Hong Kong for its second listing.